Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BRISTOL CORPORATION BILL (By Order)

Second Reading deferred till Thursday next at Seven o'clock.

BRITISH TRANSPORT COMMISSION BILL (By Order)

Second Reading deferred till Wednesday next.

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

National Agricultural Advisory Service

Mr. Boyden: asked the Minister of Agriculture, Fisheries and Food if, in view of the extra duties being placed on officers of the National Agricultural Advisory Service, he will increase the establishment of this service, and, in particular, the establishment in County Durham.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): The prospects of increasing the strength of the National Agricultural Advisory Service depend on whether we can find enough recruits of the right calibre. My right hon. Friend has arranged for special publicity to be given to this year's annual competition. If this produces more recruits of the quality we need, Durham is one of the counties where we have it in mind to appoint an additional district advisory officer.

Small Farmer Schemes (Grants)

Mr. Swingler: asked the Minister of Agriculture, Fisheries and Food the total

of grants made to small farmers in Staffordshire in each of the last five years; and for what purposes.

Mr. Frank Allaun: asked the Minister of Agriculture, Fisheries and Food the total of grants made to small farmers in Lancashire in each of the last five years; and for what purposes.

Mr. Slater: asked the Minister of Agriculture, Fisheries and Food the total number of grants made to small farmers in Durham in each of the last five years; and how such grants compare in ratio for the rest of the country.

Mr. Godber: Except under the Small Farmer Schemes no distinction is made between small farmers and other farmers for the purposes of paying grants and subsidies. I regret therefore that the full information asked for is not available.
The totals of applications received so far under the Small Farmer Schemes, which came into operation only last April, are 458 for Staffordshire, 1,081 for Lancashire, and 448 for Durham, compared with a total of 27,653 for England and Wales. Grants so far paid under the two schemes are £5,745 for Staffordshire, £15,596 for Lancashire and £12,925 for Durham compared with £700,786 for England and Wales.

Agricultural Marketing

Mr. Prior: asked the Minister of Agriculture, Fisheries and Food whether he will consider making grants to agricultural producers' marketing businesses as is proposed in the Horticulture Bill for horticulturists.

Mr. Godber: While my right hon. Friend is always anxious to assist in promoting greater efficiency in agricultural as well as horticultural marketing, the proposals in the Horticulture Bill are designed to meet the special needs of horticulture and the same methods would not necessarily be appropriate in the wider field of agriculture generally.

Mr. Prior: Does my hon. Friend realise that we are now more than ever concerned with the proper marketing of agricultural products, particularly now that the Outer Seven arrangement is coming into operation? Will he give consideration in the next Price Review, even if not in this one, to seeing if


anything can be done to help farmers sell to their products beyond the farm gate?

Mr. Godber: As far as the Price Review is concerned, my lips are sealed. As regards general issues, I assure my hon. Friend that my right hon. Friend is as anxious as he is to promote the very best marketing of agricultural produce, but the fact remains that the circumstances are very different from those of horticulture, and in the case of three or four commodities at least there are marketing boards. In most other cases the commodity concerned does not reach the consumer in the same form as that in which it leaves the producer. This is vastly different from the horticultural industry.

Covent Garden Market (Annexe)

Mr. Sydney Irving: asked the Minister of Agriculture, Fisheries and Food if the site at the junction of Old Street and City Road has yet been acquired for use by the proposed Covent Garden Market Authority.

Mr. Reynolds: asked the Minister of Agriculture, Fisheries and Food what progress is being made with regard to the acquisition of St. Lukes Printing Works for use as a store in connection with operations at Covent Garden Market.

The Minister of Agriculture, Fisheries and Food (Mr. John Hare): The London County Council is still negotiating for the site and I cannot yet add to the reply which I gave to the hon. Member for Islington, East (Mr. Fletcher) on 26th November, 1959.

Mr. Fletcher: Can the Minister please tell us how these negotiations are progressing and when he expects to be able to say that the site has been cleared?

Mr. Hare: It is very difficult for me to say when the negotiations will be completed. As the hon. Gentleman knows, the matter is in the hands of the London County Council. I know that the London County Council is very anxious to bring these negotiations to a conclusion as quickly as possible, as it has a very genuine interest in the matter because of the continuing fire risk which affects its responsibility as far as Covent Garden is concerned.

Mr. Willey: In view of the very serious objections that have been raised to this proposal, does not the right hon. Gentleman think that it would be as well to review the matter before it is too late?

Mr. Hare: I think the hon. Member is just as anxious as I am to solve the problem of Covent Garden. It has not been solved by many Governments in the past because of the inevitable objections which are bound to be raised to the solution of a problem like this. I have listened very carefully to a number of representations and have received deputations from Finsbury and Shoreditch. I sympathise with and understand their point of view—[HON. MEMBERS: "Too long."]—but I think that without a market annexe no progress can be made to improve conditions at Covent Garden.

Mr. Cliffe: Does the Minister seriously believe that, by creating the annexe at the corner of City Road and Old Street, he is solving the difficult problem of Covent Garden? Is not he creating further problems for Central London?

Mr. Hare: I am sorry some hon. Members thought my last supplementary answer too long, but this matter is of considerable interest to a large number of people. I have had the considerable benefit of their views and I have considered them carefully. But we have to have the annexe to make a start on the problem of trying to solve the immense congestion and traffic difficulties, and the other difficulties, that exist in Covent Garden.

Mr. Partridge: While a great many of us believe that what my right hon. Friend proposes to do is right, we also feel that the instrument he has chosen may be the wrong one. Could he not think again about that, even at this late stage?

Mr. Hare: My hon. Friend knows my views on this. I have also considered his views and after a great deal of thought—some people have accused me of too much delay—I have chosen the instrument which seems to me to be the best for solving this problem.

Mr. Jeger: Has the right hon. Gentleman consulted the Chancellor of the Exchequer on this, because he may find that if the Chancellor does not do something very soon Covent Garden Opera House may be available for storage purposes?

Mr. Hare: I do not know about that. I have been in constant touch with my right hon. Friend the Chancellor of the Exchequer who, of course, is fully aware of the proposals outlined in the White Paper.

Radioactive Substances

Mr. Mason: asked the Minister of Agriculture. Fisheries and Food how many inspectors are employed by his Department to analyse and control the aqueous discharges of radioactive substances into the seas and rivers adjoining nuclear power plant installations.

Mr. John Hare: There are eight officers in my Ministry concerned with controlling such discharges from nuclear power and other nuclear installations.

Captain Pilkington: Can my right hon. Friend say whether there have been many aqueous discharges of radioactive substances? If so, how do the 1959 figures compare with those for 1958?

Mr. Hare: I should like notice of that supplementary question. I should like to give full details, but it does not really arise out of this question.

Mr. Bullard: On the general question of the discharge of material into rivers, is my right hon. Friend satisfied that the river boards have staff at their disposal able to deal with the matter? There are responsibilities in this matter apart from radioactive substances. The boards' responsibilities have recently been considerably increased by an Act passed by this House. There is widespread concern about whether the river boards have at their disposal adequate technical advice.

Mr. Hare: This is a more specialised function than that carried out by river boards. That is why I have special officers designated to carry out these very technical functions. I do not think it would come within the normal functions of a board to be able to undertake the very scientific study of this work which is necessary.

Land

Mr. Manuel: asked the Minister of Agriculture, Fisheries and Food (1) the total acreage of arable land in England and Wales;
(2) the total cultivated acreage in England and Wales for the years 1957–58 and 1959.

Mr. Godber: I will, with permission, answer this Question and No. 15 together. As the reply contains a number of figures I will, with permission circulate it in the OFFICIAL REPORT.

Following are the figures:


June
'000 acres


1957
1958
1959


Cultivated acreage (crops, fallow, temporary and permanent grass)
24,487
24,506
24,487


Arable acreage (crops, fallow and temporary grass)
13,447
13,490
13,540


Tillage acreage (crops and fallow)
9,171
9,216
9,031

Notes.—Figures are for holdings over 1 acre in England and Wales. The 1959 figures are provisional.

Pig Industry

Mr. Oram: asked the Minister of Agriculture, Fisheries and Food the amount paid in subsidies to the pig industry since 1st January, 1956, up to the latest convenient date.

Mr. John Hare: In the four years 1st January, 1956, to 31st December, 1959, the amount was approximately £116 million.

Crops (Co-operative Production and Marketing)

Mr. Oram: asked the Ministry of Agriculture, Fisheries and Food what training courses, sponsored or aided by his Department, are available for farmers and smallholders wishing to study methods of co-operative production and marketing of agricultural crops.

Mr. Godber: My right hon. Friend is doing a good deal to promote co-operation in agriculture and horticulture, but does not sponsor or aid courses of training directly and has had no recommendation from the central bodies that it would be useful to do so.

Sir A. Hurd: Is not my hon. Friend working with the Agricultural Co-operative Association in this matter?


Am I right in thinking that the Government give some financial support for this training work?

Mr. Godber: Certainly we give aid to the A.C.C.A. and other bodies concerned with co-operation generally for such things as they wish to put forward. The Question dealt with training courses, for which we have had no request.

Mr. Dance: Does not my hon. Friend agree that it is essential at this moment to get far better marketing arrangements for horticultural products?

Mr. Godber: Yes. Indeed, that is the purpose of the Horticulture Bill which is at present on its way through the House. That will he a very real help to growers generally in this very important matter.

Mr. Speaker: Mr. Mason, Question No. 40.

Captain Pilkington: On a point of order. Is it not reprehensible for so many members of the Labour Party to fail to ask the Questions they put down for answer by the Minister of Agriculture today?

Mr. Speaker: One has no knowledge of the difficulties.

Oral Answers to Questions — GHANA (VOLTA RIVER PROJECT)

Mr. Mason: asked the Prime Minister to what extent he promised aid for the Ghana Volta River project during his discussions with Dr. Nkrumah.

The Prime Minister (Mr. Harold Macmillan): My talks with Dr. Nkrumah were confidential. But the hon. Member will realise that many important aspects of this bold and imaginative project are still under examination, so that it would have been premature to attempt to reach conclusions about external finance.

Mr. Mason: Is it not urgently desirable that these small States that have recently received independence should receive some economic aid from us? Is it not a fact that the Russians have been sending trade delegations, particularly, to Ghana with a view to weaning her away from the Commonwealth by offering such economic aid?

The Prime Minister: On the broad question, I think the economic aid this country has been able to give since the war is really a very fine record and one of which we all have reason to be proud. With regard to the particular project, there are of course, two separate questions. There is the financing of the smelter, which is now being studied by an organisation called Valco, which is a group of aluminium companies. There is also the project for the hydro-electric plant, and the International Bank has recently sent a mission to Ghana to appraise the economic aspects of that. While these two things are under discussion, the question of assistance from the United Kingdom or of the part we might play in a large, joint effort does not yet arise.

Oral Answers to Questions — AFRICA (DETAINEES AND RACIAL DISCRIMINATION)

Mr. Swingler: asked the Prime Minister what discussions he had during his tour in Africa concerning the release of detainees and the ending of racial discrimination of all kinds; and with what results.

The Prime Minister: It would not be right for me to say anything about the confidential discussions I had during my tour.

Mr. Swingler: The Prime Minister has not answered the last part of the Question, which asks about the results of those discussions. The Prime Minister has often said in the House that it is deeds and not words that count. What instructions has he given, as a result of his speeches in Africa and the discussions he has had, to bring to an end the arbitrary detention of Africans without trial and the practice of the colour bar in British Colonial Territories?

The Prime Minister: The question of the releasing of detainees is for the Governor to decide, in the light of the security situation.

Mr. Gaitskell: I am sure that the Prime Minister will realise that his important statement at Cape Town, which gave us so much encouragement, involves some attempt to ensure that, at any rate in the British Colonial Territories, no racial discrimination is practised. What steps has he taken to follow up his speech in Cape Town?

The Prime Minister: I think that these things will unfold. It is only a few days since I made the speech and I think that there should be some opportunity for the general unfolding of policy on lines which both the right hon. Gentleman and I, I think, agree.

Mr. Swingler: As the Prime Minister and head of the Government responsible for policy in British Colonial Territories in Africa, is not the right hon. Gentleman concerned about the arbitrary detention of citizens without trial? Is he not concerned with the practice and principle of racial equality, to which he paid lip-service in Cape Town? Should he not therefore put forward proposals?

The Prime Minister: The Colonial Secretary has shown in recent weeks what great advances are being made in the working out of these policies.

Mr. Stonehouse: Will the Prime Minister comment on the extraordinary muddle about the continued detention of Dr. Hastings Banda, which is mentioned in a leading article in The Times this morning? Will he confirm that he and his Ministers are alone responsible for the detention of Dr. Hastings Banda? Will he say when he intends to release him?

The Prime Minister: If the hon. Gentleman will put down a Question on that matter, I will answer it.

Mr. Stonehouse: We do and the right hon. Gentleman does not.

Oral Answers to Questions — AFRICA (PRIME MINISTER'S VISIT)

Mr. Stonehouse: asked the Prime Minister what requests he made to the Prime Minister of the Union of South Africa for arrangements to be made for him to meet Chief Luthuli and other African leaders during his visit to that country.

Mr. W. Hamilton: asked the Prime Minister if he will make a statement on the facilities made available to him on his recent South African tour to meet African and Asian leaders.

The Prime Minister: The arrangements which were made for my brief visit to the Union of South Africa did not enable me to receive deputations from, or meet representatives of, parties not represented in Parliament.

Mr. Stonehouse: Is the Prime Minister aware that he is being less than frank with the House? Are we to understand from his reply that he made no request to meet Chief Luthuli and other African leaders of 9 million people in the Union? If he made that request and it was refused, will he consider inviting Chief Luthuli to this country?

The Prime Minister: No, Sir. I saw representatives of the United Party and the Progressive Party and I had the opportunity of meeting Mrs. Ballinger and Mr. Patrick Duncan of the Liberal Party. I received requests from three other organisations, the Union of English-Speaking South Africans, UNESSA, the Federal Party and the African National Congress. I wrote to them to say that I had received a number of requests from different groups who wished to put their views to me in person, but arrangements had been made for my brief visit to South Africa which did not enable me to receive deputations from organisations not represented in Parliament—[HON. MEMBERS: "Oh."]—and I added:
As you will be aware from reports of my speech … I have already expressed my views at length on some of the matters you raise in your letter.

Mr. Hamilton: Is the right hon. Gentleman aware that fine words are not enough? Will he assure the House that he was not actively discouraged from seeing those African leaders, and can he tell the House how he reconciles the concept of a multi-racial Commonwealth with the continued membership of a country which does not practise it? Would he not agree with his hon. Friend the Member for Farnham (Sir G. Nicholson) that the time has come for South Africa to get out of it?

The Prime Minister: Those are very large issues and to raise them or to try to answer them in question and answer would be quite irresponsible and wrong for the Prime Minister of the United Kingdom.

Mr. Dugdale: Is the right hon. Gentleman telling the House that he himself did not suggest that he might see any Africans at any time? Is he telling the House that the South African Government refused his request, or did he simply go there asking nothing about seeing anybody and leaving it entirely to the South African Government?

The Prime Minister: It is not uncommon when one is a guest of a country, whether it be Ghana, Nigeria, or, even, Colonial countries, still more independent Commonwealth countries, to fall in with the arrangements made by one's host. I think, however, that, whether I saw particular people oar not, I was quite aware of their views and I tried in a speech at Cape Town to combine what seemed to me the proper attitude for a guest of an independent Commonwealth country with expressing the views and purposes of our country in trying to deal with the problems of Africa.

Mr. Fernyhough: Before the Prime Minister's visit, did not the host ask him whether the programme submitted met with his wishes and would he not then have had a chance to have said that he would like to meet people other than those suggested to him by the Government of South Africa?

The Prime Minister: I do not believe that it is in the interests of the very purposes which the hon. Member has in mind, certainly not in the interests of the Commonwealth, for me to try to answer the details of those supplementary questions.

Mr. Driberg: asked the Prime Minister which were the main problems discussed during his visit to Africa; with which spokesmen of the peoples of Africa he was able to discuss them; and if he will make a statement.

The Prime Minister: Throughout my tour I made a point, so far as possible, of speaking to representatives of all shades of opinion. With permission, I will circulate a concise account in the OFFICIAL REPORT.
These conversations were for the most part private, and I do not think I should say anything about the topics which were discussed.

Mr. Driberg: To what extent, however, before going on the tour, did the Prime Minister agree the arrangements for the tour?

The Prime Minister: Of course, the arrangements were broadly agreed, but perhaps the hon. Gentleman would be good enough to read the account which is rather long and which I propose to

circulate. If he has any further Questions to put after that, I shall try to answer them.

Mr. Driberg: The Prime Minister says they were agreed broadly—including the arrangements for South Africa?

Hon. Members: Answer.

Mr. Speaker: Mr. Stonehouse.

The Prime Minister: The discussions between—

Mr. Stonehouse: On a point of order. I have not yet asked Question No. 44.

Mr. Speaker: I am in no way contradicting what the hon. Member has said, because my eye was not upon him at the material moment, but I have no power to compel the Prime Minister to answer and we did not seem to make progress if hon. Members shouted at him, so I called Mr. Stonehouse.

Mr. Driberg: Further to that point of order. With great respect to you, Mr. Speaker, and to the Prime Minister, the right hon. Gentleman was apparently just rising to answer my supplementary question.

Mr. Speaker: Clearly, if the Prime Minister was about to answer, I should not seek to frustrate his intention. I had not myself observed that fact, because the right hon. Gentleman is slightly occluded by those sitting in front of him. Mr. Stonehouse—Question No. 44.

Following is the information:
In Ghana I had talks with Dr. Nkrumah, other Ministers and members of the Government Party, and also with a delegation of leading members of the Opposition United Party.
In Nigeria my principal discussions were with the Prime Minister and the Premiers of the three Regions. I also met other Ministers and opposition leaders.
In the Federation of Rhodesia and Nyasaland I met the principal representatives of the four Governments. I also met deputations from the main political parties, the United Federal Party, the Dominion Party and the Central Africa Party; and, in addition to the local representatives of the above parties, the African National Congress and the United National Independence Party in Northern Rhodesia; and in Nyasaland the Malawi Congress Party, the Congress Liberation Party and the Nyasaland Asian Convention. I also spoke to many other representatives of various communities and interests.
In the Union of South Africa, besides my private discussions with Dr. Verwoerd and


other Ministers, I met representatives of the Opposition Parties represented in Parliament and the Council for Coloured Affairs. In Basutoland, the Bechuanaland Protectorate and Swaziland I met, besides the Resident Commissioners, prominent persons of all races.

Mr. Stonehouse: asked the Prime Minister what request the Prime Minister of the colony of Southern Rhodesia made to him, during their official conversations in Salisbury, for the deletion of the clauses in the Constitution of Southern Rhodesia giving power to the United Kingdom Government to veto legislation passed by the Legislature of Southern Rhodesia which is discriminatory against Africans; and if he will give an assurance, similar to that which he gave to Africans in Northern Rhodesia and in Nyasaland, that this protection will not be withdrawn from the Africans of Southern Rhodesia except with the full agreement of the Africans so protected.

The Prime Minister: The discussions between Sir Edgar Whitehead and myself were confidential, and it would not be in accordance with Commonwealth practice to say anything about them. As regards the second part of the question in the event of any change being made in the Constitution of Southern Rhodesia, the interest of Africans would of course be given full weight.

Mr. Stonehouse: Why does the Prime Minister draw such a distinction between the 2 million Africans in Southern Rhodesia and the 5 million in the two Northern Protectorates? Does he not realise that the Africans in Southern Rhodesia regard this country's protection over their rights as seriously as do those who live in the two Northern Protectorates? Will he confirm here and now that there will be no question of changing the Constitution of Southern Rhodesia and withdrawing these clauses, except with the express agreement of the Africans in Southern Rhodesia?

The Prime Minister: No, Sir. The position of Southern Rhodesia is considerably different from that of the two Northern Protectorates, which are Colonial Territories. I make it clear that in any change—if there were to be a change, and I am not saying that there will be—the interests of the Africans will, of course, be given full weight by Her Majesty's Government.

Mr. Wall: Is it not a fact that Southern Rhodesia has been internally self-governing since 1923, and did not my right hon. Friend notice during his visit that race relations in Southern Rhodesia were considerably better than in many other parts of Africa?

Mr. Prime Minister: I think there are continued improvements which we owe to the leaders of opinion in that country.

Mr. Marquand: The Prime Minister informed the House on Tuesday that he was not aware that Sir Edgar Whitehead had said that one of his conditions for attending the Constitutional Review in 1960 was that this clause should be suspended or taken out of the Constitution. Has he now had an opportunity to look at what Sir Edgar Whitehead said? Is it not true that Sir Edgar Whitehead threatened that he would not participate any further unless this power of the British Parliament was taken away from it?

The Prime Minister: I am glad that the right hon. Gentleman has asked that supplementary question, because I have looked at the full report of Sir Edgar Whitehead's remarks, which are rather longer and more correctly reported than in the Press cutting which the right hon. Gentleman was good enough to give me. It is quite clear that Sir Edgar Whitehead was not saying that he would not participate in the review conference unless his conditions were met, but he was putting up that he would not agree to anything unless his conditions were met. In other words, he was not making a preliminary condition for entering the conference. He was setting out, as people often do before they start negotiations, what he hoped to get out of it.

Mr. Speaker: I have been guilty of an error. I should not have allowed the right hon. Member for Middlesbrough, East (Mr. Marquand) to ask that supplementary question, because of a Question he has put down to be answered later. I am sorry. He was too quick for me and I had forgotten the later Question.

Mrs. Castle: asked the Prime Minister why, during his tour of South Africa, he agreed to open Turfloop College, one of the five segregated Bantu colleges being established by the Union Government.

The Prime Minister: I did not open the Bantu University College at Turfloop.

Mrs. Castle: Is the Prime Minister aware that the Daily Mail carried a most distressed article written by Mr. Henry Fairlie regretting very much that the Prime Minister had agreed to take this action and thus apparently to lend his support to what Mr. Fairlie described as a "showpiece" of apartheid? Can he say whether he kept his arrangements so private that even the Press did not notice them?

The Prime Minister: All I said was that I did not open it. In the course of a rather long day travelling about the Northern Transvaal I was taken to and shown the still unfinished buildings of this university.

Mrs. Castle: In view of the Prime Minister's amendment to his reply, may I now ask him if he does not think that it is most unfortunate that he should have visited this segregated Bantu College, which is part of a long-term plan of the South African Government to destroy the long-standing multiracialism of the Cape Town and Witwatersrand Universities—[Interruption.]—

Mr. Speaker: Order. I hope that the hon. Lady will soon bring her supplementary question to an end.

Mrs. Castle: I am very anxious to do that, and I would be able to do so if hon. Gentlemen opposite stopped taking the conduct of the business of this House out of your hands. Mr. Speaker—[HON. MEMBERS: "Oh."]—I am not surprised that hon. Gentlemen opposite do not like this question May I ask the Prime Minister if this visit was included in the plans for his tour before he left for South Africa?

The Prime Minister: If one goes to a country it is as well to see what is going on there. That does not mean that one approves of it. I expressed my broad views in the speech I made. It seems sensible to see what is going on in a country.

Mr. Awbery: asked the Prime Minister what opportunities he had while in South Africa to meet representatives of the coloured people for the purpose of discussing with them their

particular problems; what requests he made for such facilities; who were the people he thus met; and if he will make a statement.

The Prime Minister: The Union Government arranged for me to meet the Council for Coloured Affairs on 5th February in Cape Town.

Mr. Awbery: A moment or so ago, in answer to a supplementary question, the Prime Minister said, "When I go to a country I want to see everything that is to be seen." Am I to understand that when he went to Africa he decided to see representatives of 20 per cent. of the people and to ignore the other 80 per cent.? Was he invited to see the representatives of the large majority of people in Africa?

The Prime Minister: As I said, I saw representatives of the coloured people, and in speaking to them I made it clear that I was speaking not merely to the statutory body but to the coloured community as a whole.

Mr. Driberg: Can the Prime Minister now answer the supplementary question which he was unable to answer a few minutes ago and which is directly relevant here? Can he say whether the arrangements for his visit to South Africa were among the arrangements for the tour which were broadly agreed in advance? Did he in fact specifically ask to see African people?

The Prime Minister: A general picture of the tour was given to me. I repeat that when one goes to an independent Commonwealth country it is right and proper, as a guest, broadly to follow the wishes of one's host in what one says, and in regard to those to whom one speaks. I think I went as far as the traditions of our Commonwealth independence allow. I certainly tried to do so as courteously as I could in spite of being the guest of a Parliament and stating views which I knew were not friendlily received by them, but which, nevertheless, were received with great courtesy. I thought that by far the best course was the one I followed which was to state our views without trying to impinge in any way on the independence of a Commonwealth country.

Mr. Gaitskell: While the guest must take account of the views of the host,


it is usual for the host to take account of the views and desires of the guest. May I ask whether the right hon. Gentleman is aware that there is a general impression that he wished—

Viscount Hinchingbrooke: The right hon. Gentleman did not behave like that at his Khrushchev dinner party.

Mr. Gaitskell: The longer the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) remains in this House the worse his manners become.
Is the Prime Minister aware that there is a general impression that he wished to meet representatives of the coloured communities, but was not allowed to do so? Would it really do very much harm if he made that plain?

The Prime Minister: I am sure that if the right hon. Gentleman held my position and realised the character of the Commonwealth, the importance of maintaining its independence, and the many difficulties that face it in the future, and if he had in mind the conference we are about to hold in May, he would not press me to go beyond what I have said.

Oral Answers to Questions — HOUSE OF COMMONS PROCEEDINGS (TELEVISION)

Mr. Ellis Smith: asked the Prime Minister (1) if he has yet completed his consideration of the proposal to appoint a Select Committee to consider the televising of parts of the proceedings of the House of Commons; and if he will now make a statement;
(2) if he will consider arranging for experiments to be made by the taking of a film at Question Time, so that it can be used by the television service at their peak period.

The Prime Minister: I hope to make a statement shortly.

Mr. Ellis Smith: Is the Prime Minister aware that it has been noted amongst the people generally that he himself appears on television whenever an opportunity a rises, and that during the visit of the American President, Mr. Eisenhower, he capitalised the opportunity to the maximum extent? While not speaking critically of the Prime Minister, may I ask whether he is aware that the people in the country believe that the time has

arrived when what is good for the Prime Minister is equally good for their representatives in the House of Commons?

The Prime Minister: I am glad that the hon. Gentleman is not speaking critically of me. I shudder to think what he would say if he were.

Sir T. Moore: I very much hope that my right hon. Friend will bear in mind that many of us in this House are not as photogenic as he is.

Mr. Emrys Hughes: Is the Prime Minister aware that there is a growing custom now to televise religious services? Will he consider having discussions now about whether Prayers in the House of Commons should be televised in order to attract the Government Front Bench?

The Prime Minister: It might also attract today's absent questioners.

Sir P. Agnew: If we are to have our proceedings televised, which many hon. Members would deprecate, would my right hon. Friend, in that eventuality, arrange that it is done on an occasion when a number of hon. Gentlemen opposite are not shouting at him all the time?

The Prime Minister: This is a subject that we have discussed, and I think that while I was away certain further inquiries were made and discussions held. I should have thought, and I think the right hon. Gentleman the Leader of the Opposition would agree with me, that this was a House of Commons matter, and that what we have to try to do is to get the general view of the House as to what is desirable. At the same time, in order to help, I think that a certain number of technical inquiries have been made as to what would be possible before it is decided what it would be wise to do.

Mr. Gaitskell: I agree with the Prime Minister. I think that this is essentially a House of Commons matter. I was about to ask whether he would give an assurance that no irrevocable Government decision would be taken until the House as a whole, on the basis of a free vote, had had an opportunity to express its views.

The Prime Minister: I would certainly consider that. I am sure that it is for


the House to decide. We try to collect views as far as possible, and I think there is quite good machinery for doing that; but any final decision obviously ought to be one that the House takes with its full responsibility as the House of Commons.

Mr. Ellis Smith: May we also have an undertaking from both sides that when this issue is considered by the House of Commons there will be a free vote? Also, because of past experience, will the Prime Minister give an undertaking that proposals for a Select Committee will not be used as a delaying device?

The Prime Minister: I find it very difficult to give an undertaking on behalf of both sides of the House.

Oral Answers to Questions — MONCKTON COMMISSION

Mr. Sorensen: asked the Prime Minister whether he will make a statement on his discussions with the Prime Ministers of the Federation of Rhodesia and Nyasaland and of Southern Rhodesia regarding the scope of the terms of reference of the Monckton Commission, with particular regard to the divergent interpretation of the latter by Lord Shawcross, a member of the Commission appointed by him.

The Prime Minister: My discussions with the two Prime Ministers were private.

Mr. Sorensen: Does not the Prime Minister consider it desirable to clarify the terms of reference now rather than later, and thus save an outburst of recriminations and misunderstandings? Is it not better to clear up this matter now?

The Prime Minister: No. I think the time for that has passed. The Commission has started its work. It has begun its sittings, and I think that, whatever may have been the differences of opinion, either on the terms of reference or on the composition, it will be the general hope of the House, now that it has started its work, that the results of its work will be useful and fruitful.

Mr. Ridsdale: Is my right hon. Friend aware that many people in this country feel that it would have been far better if the Opposition had joined the Monckton Commission instead of trying

to undermine its position in the manner in which they are trying at the present time by asking Questions which will undermine the position of the Commission and cause trouble in Africa?

Mr. Gaitskell: Can the Prime Minister say whether the visit of the Secretary of State for Commonwealth Relations to the Federation, and the talks he will have with Sir Roy Welensky, concern the terms of reference of the Monckton Commission, or can he say what other purpose this visit serves?

The Prime Minister: I said in my statement the other day, and I think that the right hon. Gentleman agreed, that the purpose of these tours as Prime Minister was not to negotiate but to have general discussions and to get a broad picture. There are a considerable number of matters in this rather important year leading up to the review and so on which my noble Friend felt he would like to discuss with Sir Roy Welensky.

Mr. Wade: asked the Prime Minister what assurances were given to Mr. Wellington Chirwa before he accepted the invitation to serve on the Monckton Commission.

The Prime Minister: In discussions with Mr. Chirwa, I went carefully over all that Her Majesty's Government have said publicly about the scope and purpose of the Monckton Commission. My right hon. Friend the Secretary of State for the Colonies had done the same thing previously when Mr. Chirwa was in London. I assume from his acceptance of membership that Mr. Chirwa found this reassuring.

Mr. Wade: As immediately after accepting the invitation Mr. Chirwa is reported to have said that he was as firmly opposed to Federation as ever, may we assume from this that there is now no limit imposed by the terms of reference on the scope of the work of the Commission or on the proposals which the Commission may ultimately be entitled to recommend?

The Prime Minister: No, Sir. Regarding the terms of reference, we have been over that many times in this House. As I say again, the Commission has started work and I think it would be much to everybody's benefit to let it get on with it.

Mr. Stonehouse: Is it not a fact that one of the conditions made by Mr. Wellington Chirwa before accepting membership of the Commission was that Dr. Hastings Banda would be released? Will Dr. Banda be released?

The Prime Minister: I understood from Mr. Chirwa, in fact he stated to me, that he had a number of conditions. I told him they were unacceptable but still urged him to join the Commission, which he ultimately did.

Oral Answers to Questions — RHODESIA AND NYASALAND (DETAINEES'DEPENDANTS)

Sir L. Plummer: asked the Prime Minister whether he is satisfied, from the inquiries that he made in the Federation o: Rhodesia and Nyasaland, that dependants of Africans from Nyasaland and Northern Rhodesia, detained under Emergency Regulations, are receiving reasonable and adequate financial assistance from the detaining Government.

The Prime Minister: This was not a question which arose during my visit, but I understand that special financial assistance is given to the dependants of detainees by the Nyasaland Government.

Sir L. Plummer: Can the right hon. Gentleman now make inquiries and satisfy himself that the provisions are reasonable and adequate, especially for those detainees who have been released, and were therefore palpably innocent when arrested, and whose dependants suffered while they were in custody?

The Prime Minister: If the hon. Member wants to have the details of this matter, perhaps he would put down a Question addressed to the Colonial Secretary.

Oral Answers to Questions — DR. HASTINGS BANDA

Mr. Fernyhough: asked the Prime Minister what discussions he had during his recent visit to the Federation of Rhodesia and Nyasaland with those responsible about the detention of Dr. Hastings Banda and others; and when time now detained are likely to be released or brought to trial.

Mr. Fletcher: asked the Prime Minister to what extent, in the course of

his visit to the Federation of Rhodesia and Nyasaland, he discussed with those responsible the desirability of Dr. Hastings Banda being released from detention on terms acceptable to him to enable him to give free and complete evidence to the Monckton Commission.

The Prime Minister: The question of the release of the detainees or the ending of the emergency in Nyasaland is a matter for the Governor to decide in the light of his views on the security situation. The question of bringing detainees to trial is a matter for the Attorney-General of Nyasaland. It has already been made clear that arrangements can be made for any persons who may still he in detention to give evidence to the Monckton Commission if they so wish.

Mr. Fernyhough: Is not the Prime Minister a little ashamed that in the British Commonwealth men should be languishing in gaol for twelve months with no charge brought against them? Do not incidents of this kind make our propaganda against what is going on in some Eastern countries a little hypocritical?

The Prime Minister: A balance has to be kept between what one would hope to do and the needs of security. In that respect the local Governor has a great responsibility, although my right hon. Friend the Colonial Secretary has made it clear that he hopes to see the emergency situation brought to an end. A number of detainees have already been released. I would like to leave the matter there for the moment. I feel sure that the hon. Member will realise the very heavy responsibilities that lie upon the local administration for the preservation of peace.

Mr. Gaitskell: Although the Governor is responsible in this matter, he, in turn, is answerable to Her Majesty's Government, who have to take into account not only the immediate local situation but also the wider political issues. Do Her Majesty's Government accept responsibility for determining this issue?

The Prime Minister: Without notice, I would not like to state the precise constitutional position, but the final responsibility rests with Her Majesty's Government either to accept or to reject the Governor's advice, whatever may be the consequences. But I think the House


as a whole feels that all these matters involve very difficult questions of balance, in which what we hoped to do is clear, and how best we can achieve it necessitates that those who are responsible should at least have the right to have their voices heard.

Mr. Fletcher: Will the Prime Minister tell us the facts with regard to the detention of Dr. Hastings Banda? Is it correct, as stated in The Times, that the Prime Minister and the British Government have expressed the view that he should be released, and that his release would be of service to the Monckton Commission? If so, is not the constitutional position such that the Prime Minister must take the responsibility for this decision? Can he explain why, following his visit, Dr. Banda is still in detention? Is it correct that his release has been offered under certain conditions? If so, may we be told what those conditions are?

The Prime Minister: I am not responsible for what appears in The Times. I have answered the question. The responsibility for bringing the emergency to an end is primarily a matter for the Governor, but it is ultimately a question for Her Majesty's Government, and they are still weighing the problems in the hope of bringing the emergency to an end as soon as possible. I know that the Governor shares this view and that he will bring the emergency to an end as soon as he feels it right to do so.

Mr. Fletcher: This is a question on which the House is entitled to information so that, if necessary, it can criticise the Government. Is it correct that Dr. Banda's release has been authorised on certain conditions? If so, may we know what those conditions are, so that we may judge whether they are reasonable?

The Prime Minister: It is certainly not correct to say that Dr. Banda's release has been authorised on certain conditions.

Mr. S. Silverman: I fully accept the right hon. Gentleman's Answer to the original Question, namely, that the question whether a state of emergency shall be proclaimed or ended is a matter for the Governor; but can he say, from his own observations and his extensive travels in the country, and the many people he saw, whether he observed any

signs of disorder or of the existence of an emergency situation?

The Prime Minister: I must follow the very sound advice given to me on Tuesday by several hon. Members, namely, not to set myself up as an expert on the strength of a three-day visit.

Mr. Shinwell: As the Prime Minister has agreed that the Government have a responsibility in the matter, can he say what advantage is derived by detaining Dr. Banda in prison? Does he suggest that if Dr. Banda were released disturbance or a breach of the peace would be caused, which would lead to further trouble? Can he explain that?

The Prime Minister: The release of all detainees, including Dr. Banda, and the bringing to an end of the emergency have certain security risks, and it is the duty of the Governor, and ultimately of this Government, to weigh those risks and reach a decision.

Mr. Gaitskell: Is the Prime Minister aware that as long ago as the first week in January the Colonial Secretary announced that there would be an accelerated rate of release of detainees, but that this has not taken place? When are the Government likely to come to a conclusion about the release of Dr. Banda?

The Prime Minister: That is another question. There has been a considerable release of detainees. If the right hon. Gentleman wants to know the details perhaps he would put down a Question addressed to my right hon. Friend.

Mrs. Castle: asked the Prime Minister why he did not see Dr. Banda during his visit to the Federation of Rhodesia and Nyasaland.

The Prime Minister: I had, of course, ample opportunity to listen to the views of Africans, and I did not consider it appropriate to make separate arrangements to see Dr. Banda.

Mrs. Castle: Has not the Prime Minister just told us that his purpose was to have talks with representatives of all shades of opinion in these areas? Is not Dr. Banda an outstanding shade of opinion? What is the use of these visits if the Prime Minister can be prevented from seeing the obvious leaders of the


people concerned because the Governor decides to shut them up because he does not like their views?

The Prime Minister: Included among those I saw were the representatives of the Malawi Congress Party, which is in a sense the party of Dr. Banda.

Oral Answers to Questions — HIGH COMMISSION TERRITORIES

Mr. J. Hynd: asked the Prime Minister what assurances he was asked for by, and gave to, the people of the Protectorate Territories of Basutoland, Bechuanaland, and Swaziland during his recent visit, concerning the future position of those Territories within the Commonwealth.

The Prime Minister: I was not asked to give assurances regarding the future position of Basutoland, the Bechuanaland Protectorate and Swaziland within the Commonwealth. But I made it plain during my visit that Her Majesty's Government stand firm by the statement made in this House by my right hon. Friend the Member for Woodford (Sir W. Churchill) on 13th April, 1954.

Mr. Hynd: May we take it that the absence of any request for such assurances is sufficient evidence of the confidence of the people of these Territories in the statements which have already been made?

The Prime Minister: There was no particular request at the meeting we had but I stated it I think in Francistown when I was there, in one of the Territories, and at Press conferences at Pretoria and Cape Town. In Pretoria I read out to a Press conference the text of my right hon. Friend's statement.

Oral Answers to Questions — ELECTRICAL TRADES UNION

Mr. Farey-Jones: asked the Prime Minister, in view of the public concern over a recent ballot in the Electrical Trades Union and the failure of the Trades Union Congress to carry out a satisfactory investigation into the affairs of that union, if he will move for the appointment of a tribunal under the Tribunals of Inquiry (Evidence) Act to inquire into the Union's administration and into allegations of malpractices.

The Prime Minister: I am not convinced that action on the lines proposed by the hon. Member would necessarily be appropriate at this stage.

Mr. Farey-Jones: In view of the fact that this has now become a matter of national probity and straight dealing, will my right hon. Friend kindly review the Answer he gave to me when I asked a similar Question in 1957? Will he bear in mind that not only is there a continuing menace to the community from the administration of this union, but there is now—

Mr. Ellis Smith: Like the Freemasons.

Mr. Speaker: Order. These gay exchanges do not advance the progress of Questions.

Mr. Farey-Jones: There is now a direct threat to the vital principles of trade unionism? In view also of the fact that a spectacular and sordid manipulation of power by a minute group of people who owe their allegiance to a foreign Power is intolerable, will my right hon. Friend initiate legislation to end this difficulty?

The Prime Minister: I think it would be true to say that there was some anxiety about this situation among all those who realise the value and importance of the trade union movement in the industrial and national life of the country.
There are, I am told, provisions in the rules of this union for decisions of the Executive Council to be questioned by members, and, if there was sufficient backing for action of this kind, it could lead to an investigation. There is also, of course, the power of the Trades Union Congress under Rule 13 to make an investigation. I am aware that the Congress started an investigation and then broke it off, saying it did not intend to engage in any more "abortive discussions." I feel myself that at this stage these two possibilities are open. While I share the anxiety, which I think we all feel, that trade unions, like every other association, should be managed with the greatest possible probity, I do not think the particular method suggested is the right one to indulge in at the present time.

Mr. Robens: Is it not the case that the inference in the Question of the hon.


Member for Watford (Mr. Farey-Jones) is incorrect, inasmuch as the General Council of the Trades Union Congress still has this matter under consideration and is due to report to the Congress in September? To that extent—[HON. MEMBERS: "Oh."]—the Trades Union Congress just happens to meet once a year, though that may not suit hon. Gentlemen opposite, and it has its rules which it will carry out. Therefore, his inference that the General Council is not carrying out its duty is quite wrong. Is it not the case that members of organisations set up under the Industrial and Provident Societies Act have recourse to the Registrar if they feel that the rules of the organisation are not being properly carried out?

The Prime Minister: I think I did say that I understood there are provisions in the rules—we can only work under the provisions in the rules of a particular society—for decisions of the Executive Council to be questioned by members. Therefore, I suppose there is a possibility, if there is sufficient backing for it, for action to be taken under this rule, in which case an investigation, as the right hon. Gentleman says, would follow. There is—I hope I did not misrepresent it—a second opportunity, namely, for the Trades Union Congress as a whole to act. I understood it had been in negotiation for some time, but on 25th November it told the union that it did not intend to engage in any further abortive discussions. I quite understand that that does not preclude it from making a report, but that is rather a long time ahead. I am sure that everyone hopes that measures may be taken by whatever is the proper tribunal, and I am sure that the trade union movement itself should be the first to try to clear up a situation about which no one is really very happy.

Oral Answers to Questions — UNION OF SOUTH AFRICA (SCHOLARSHIPS, BRITISH UNIVERSITIES)

Sir L. Plummer: asked the Prime Minister what representations he has made to the South African Government concerning the award of scholarships to universities in Great Britain.

The Prime Minister: None, Sir.

Sir L. Plummer: Is the Prime Minister aware that Sir Henry Willink, chairman of the Cambridge University Scholarship Committee, has had to withdraw the first award of a scholarship to an African universities is bad enough but African Government will not permit him to come to this country? Now that he has this information, will the right hon. Gentleman tell the Prime Minister of South Africa that apartheid in South African Universities is bad enough but he should not try to extend segregation to Cambridge and other English universities?

The Prime Minister: I understood that all these matters have been settled, but I will look further into the details, and if there is anything I can do I shall certainly be prepared to do it.

RAILWAYS (CANCELLATION OF SERVICES)

Mrs. Castle (by Private Notice): asked the Minister of Transport, in view of the failure of the British Transport Commission by the cancellation of a large number of trains this coming week-end to discharge its obligations under Section 25 of the Transport Act, 1953, to provide railway services having due regard to the needs of miscellaneous public, whether he will give a general directive to the Commission not to cancel any passenger services which have already been announced.

The Minister of Transport (Mr. Ernest Marples): No, Sir. This is a matter of management which is the responsibility of the British Transport Commission. Nor can I accept the implication in the Question about a failure to discharge a statutory obligation which also includes the obligation to have due regard to the needs of agriculture, commerce and industry.

Mrs. Castle: Is not the provision of Cup Tie specials one of the services the British public have a right to expect from their railways? Have we not reached a ludicrous situation when British Railways are having to turn away traffic owing to shortage of staff? Does not the responsibility lie squarely on the Government, who have refused to help the Commission to pay the necessary living wages to enable it to get its staff?

Mr. Marples: The regular services for passengers, agriculture, commerce or industry must come first. These speculative and occasional operations should be provided when they can be, but in the recent cold spell it has been necessary to move coal much more quickly than in the past few weeks.

Mr. Speaker: Mr. Gaitskell.

Mr. Dugdale: rose—

Mr. Speaker: Does the right hon. Member for West Bromwich (Mr. Dugdale) desire to address a point of order to me?

Mr. Dugdale: Yes, Mr. Speaker. As 10,000 of my constituents are interested in the Question, may I be allowed to ask a supplementary question?

Mr. Speaker: I realise that many people are interested in this matter. That is one of the reasons for it being asked as a Private Notice Question, but I think that we ought to get on with the business.

Mr. Manuel: Further to that point of order. Allegations have been made and replies have been made by the Minister of Transport which leave a whole lot of questions in the air. Some hon. Members on this side of the House are responsible to large numbers of people, not only those who have left their jobs, but those still on the job. Could we not suggest ways and means about how this is to work?

Mr. Speaker: I can understand the point made by the hon. Member and the emotions which promote it, but I also am responsible to this House collectively and in the discharge of that duty I feel that we ought to get on.

Mr. Benn: On a point of order. Is it not the fact that the shortage of train crews arising out of the situation is a direct responsibility of the Minister? Is it not appropriate—

Mr. Speaker: That, clearly, is not a point of order.

BUSINESS OF THE HOUSE

Mr. Gaitskell: May I ask the Leader of the House whether he will state the business of the House for next week?

The Secretary of State for the Home Department (Mr. R. A. Butler): Yes, Sir. The business for next week will be as follows:
MONDAY, 22ND FEBRUARY—Consideration of private Members' Motions until 7 o'clock.
Afterwards the following Government business will be taken:
Committee and remaining stages of the European Free Trade Association Bill, and of the Distress for Rates Bill [Lords], which is a consolidation Measure.
TUESDAY, 23RD FEBRUARY—Supply [2nd Allotted Day]: Committee.
Civil Estimates and Estimates for Revenue Departments Vote on Account, which it is proposed to take formally.
A debate will take place on Local Employment Areas, on an Opposition Motion.
WEDNESDAY, 24TH FEBRUARY—Report and Third Reading of the Horticulture Bill.
THURSDAY, 25TH FEBRUARY—Supply [3rd Allotted Day]: Report.
Civil Estimates and Estimates for Revenue Departments Vote on Account, which it is proposed to take formally.
A debate will take place on the Local Authority Rate Burden, on an Opposition Motion.
At 7 o'clock, as the House is aware, the Chairman of Ways and Means has set down opposed Private Business for consideration.
FRIDAY, 26TH FEBRUARY—Consideration of private Members' Motions.
In addition to announcing the proposed business for the following Monday, it may be to the general convenience of the House for me to announce the dates of the Defence debate and of the debates on the Service Estimates, which are as follows:
MONDAY, 29TH FEBRUARY, and TUESDAY, 1ST MARCH—A debate will take place on the Defence White Paper.
THURSDAY, 3RD MARCH—We shall consider the Air Estimates, 1960–61.
MONDAY, 7TH MARCH—The Navy Estimates, 1960–61.
WEDNESDAY, 9TH MARCH—The Army Estimates, 1960–61.
THURSDAY, 10TH MARCH—We shall consider the various Money Votes required for the Services before the end of the Financial Year.
The business on these four days will be taken on allotted Supply Days and the debates on the Air, Navy and Army Estimates will, of course, arise on Votes A in Committee of Supply.
The Money Votes to be taken in Committee of Supply on Thursday. 10th March, will be announced later.

Mr. Gaitskell: Can the right hon. Gentleman say when the Government will fulfil their promise to find time for a debate on the accommodation and facilities available to hon. Members for the discharge of their duties?

Mr. Butler: As the right hon. Gentleman will remember, we suggested half a day before Christmas. When that was thought not to be enough, we said that we would attempt to arrange a full day, but there is a little difficulty ahead because of the business I have announced. This is a busy time of the year, but no doubt we can have conversations on the matter.

Dame Irene Ward: With reference to Tuesday's business, can my right hon. Friend give an assurance that it will not be just a Board of Trade discussion, but that a senior Minister from some other Department will also take part, having regard to the fact that ship repairers are very disappointed with the new Local Employment Bill? Their complaints have had to be directed, under the proper procedure, to the Ministry of Transport. In view of this, it would hardly be fair if their complaints are discussed in the House and an answer had to be given by the Board of Trade when, actually, it is for the Ministry of Transport to protect their interests.

Mr. Butler: As I understand, the debate will be based on the Local

Employment Bill, so the primary responsibility will be a matter for the President of the Board of Trade. I shall, however, pay attention to and discuss the point raised by my hon. Friend.

Mr. H. Wilson: Is the right hon. Gentleman yet in a position to say when the House will be going into Committee of Ways and Means to hear the Chancellor open his Budget?

Mr. Butler: No, Sir, but I shall tell the House as soon as I can.

Viscount Hinchingbrooke: May I ask a question about the beginning of the Estimates season? In this new Parliament, is time not to be allowed for hon. Members generally, and particularly those on this side of the House, to raise questions concerning finance, about the Estimates, value for money and a broad judgment on the questions that the Select Committee on Estimates deals with in detail? Are we to fall back into the old habit of allowing the Opposition to move a Motion on a polemical topic of the day while we vote hundreds of millions of pounds on the nod?

Mr. Butler: While it is true that the House is the guardian of the nation's finances, there are also certain traditions in relation to our procedure and the way in which we handle these Estimates. I agree that it is important that the House should retain its traditional rôle of guarding the finances, but I cannot go any further than the statement that I have made today.

Mr. Gaitskell: Is it not a fact that the Supply Days are Opposition time and that it is for the Opposition to choose the subjects to be debated on them? Is it not also the case that during the Budget debate and afterwards there are plenty of opportunities for discussing the Estimates and other matters of finance?

Mr. Butler: It is clearly recognised that on Supply Days the business is chosen by the Opposition. The Government of the day have always respected this feature of our constitution. It is equally important, when we can, to use the opportunity to discuss the Estimates, as my noble Friend suggests, and I hope that that point will not escape the notice of the Opposition in choosing their subjects for debate.

Mr. H. Wilson: Since the right hon. Gentleman is so keen on the House maintaining control over expenditure, may I ask whether it is not a fact that in previous years the Chancellor of the Exchequer has made a full statement of any reasons for changes in the Civil Estimates? That was started by the present Prime Minister when he was Chancellor of the Exchequer, in 1956. In view of the inordinate increase in Government expenditure in the Estimates for 1960–61, why has the Chancellor broken with that precedent?

Mr. Butler: The Chancellor of the Exchequer will have ample opportunity to make observations on this subject. I cannot add any more today.

Mr. S. Silverman: On a point of order. Am I not right in saying that, although we changed the practice of the House in respect of debates on the Service Estimates, we have never changed it in respect of the Civil Estimates, which are still exempted business? In other words, if right hon. and hon. Gentlemen desire to raise other subjects, they have the whole night in front of them in which to do so.

Mr. Speaker: I do not think that the debates on Civil Estimates are exempted business, but I would rather instruct myself before I purport to rule as against the hon. Member's experience.

Mr. Donnelly: Will the right hon. Gentleman say when he thinks that it will no longer be possible for the Government to put off having a debate on the railways?

Mr. Butler: The Government would welcome an opportunity for a positive debate on the railways in due course.

Mr. Speaker: Mr. Yates.

Mr. Collick: On a point of order. May I ask a question?

Mr. Speaker: In due time. I thought that the hon. Member for The Wrekin (Mr. W. Yates) was rising to a point of order.

Mr. W. Yates: In view of the Prime Minister's reply to my hon. Friend the Member for Watford (Mr. Farey-Jones), may I ask the Leader of the House whether he will consider giving time for hon. Members to discuss the value of

appointing a Royal Commission to examine trade union law and practice, in the public interest?

Mr. Butler: We have so much financial and Supply business at the moment that I cannot see an immediate opportunity for that.

Mr. Collick: Have the Government any proposals to put before the House for putting the finances of the British Transport Commission on a sound basis so that the Commission may stand some chance of overcoming its problems? When is the House to have an opportunity to discuss British Railways?

Mr. Butler: I can answer questions on business, but I should not deal with questions of policy in answering business questions. The fact that the House wishes to discuss British Railways, including their future, is a point which we have very much in mind, but I cannot make a further statement today.

Mr. Shinwell: Is the right hon. Gentleman aware that there is a Motion on the Order Paper, signed by a large number of Conservative Members,
[That this House requests the Government as a matter of urgency to institute a full scale inquiry into every aspect of British Railways, on the following terms of reference:—
"To make recommendations as to the appropriate rôle in the second half of the twentieth century of a railway system laid out in the nineteenth and how this might be achieved and what would be the cost to the Exchequer within that context, to report on the ability of a modernised railway system to give efficient service to the public at competitive rates and to provide conditions for those employed on the railways to take pride in their work and to earn a living comparable to those in other industries; and to make recommendations for the hiving off and, where necessary, disposal of all railway properties and activities superfluous to the operation of a modern railway system and to submit a report thereon to the House within twelve months"]
and an Amendment, signed by myself and several of my hon. Friends,
[leave out from "industries" to end and add "and calls upon the Government to recognise the rights of all Members of


Parliament to receive full information about a dispute gravely affecting the interests of the travelling public and the employees of the British Transport Commission and to make a full statement to Parliament on the recent dispute and the negotiations which brought about a settlement".]
asking for an inquiry and also for a statement from the Government on the general position of the railways? Is it not true that the Government contemplate making a statement on this subject, apart from the question of an inquiry?
May I also ask whether the right hon. Gentleman has seen the Motion on the Order Paper, signed by hon. Members on both sides of the House, referring to discrimination against British shipping? As this is a very important topic, will he find time for a general debate on it?
[That this House calls for increased efforts on the part of Her Majesty's Government to renew its endeavours to secure free and fair competition for British shipping and to redouble its efforts to obtain a reconciliation of shipping policies wth the United States of America whose discriminatory shipping practices run counter to its general trade policy of liberalisation.]

Mr. Butler: I have seen the Motion and the Amendment on the subject of the railways. It is the Government's wish, in due course, to make a statement about the railways and the plans for the future, which are subjects in everyone's mind.
I have also seen the Motion on the Order Paper about shipping and discrimination. I think that it is more than likely that time will be found for a discussion of the former subject before the latter question arises.

Mr. Driberg: Will the right hon. Gentleman say whether the opposed Private Business to which he referred includes, next week, the City of London (Guild Churches) Bill?

Mr. Butler: I do not think that it does.

Mr. Fernyhough: In view of the substantial increase in the Service Estimates and the desire of hon. Members sitting behind the Leader of the House to probe into Government expenditure, when the

right hon. Gentleman announces business for next week in relation to the Estimates will he see that ample time is given for all hon. Members who want to take part in the debates to do so?

Mr. Butler: Yes, Sir. We had a certain time available last year, and I have it in mind that we should consider what is the general convenience of the House this year in deciding the time available.

Mr. Nabarro: Would my right hon. Friend consider making a statement next week on the question of initiating a debate on the Supplementary Civil Estimates, having regard to their magnitude this year? Though, undeniably, it may be exempted business, how can Government back-bench Members like myself, or my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), initiate a debate? Would it not be convenient for us to do so some time next week, or the following week?

Mr. Butler: It is always instructive and valuable to hear my hon. Friend's views. He is on a matter of great public importance which I will certainly discuss with my right hon. Friend the Chancellor of the Exchequer in the light of representations made.

Mr. Gaitskell: Is the right hon Gentleman aware that we propose to have debates on the Supplementary Civil Estimates a little later?

Mr. Butler: I cannot go further ahead with business than I have very exceptionally done this time, but we have that point in mind.

Mr. Lipton: May we have an opportunity of discussing at an early date the question of Government interference with B.B.C. television programmes, and, in particular, the pressure which was brought to bear on the B.B.C. to include the hon. Member for Guildford (Sir R. Nugent) in a debate on the railways which took place last Monday night between the right hon. Member for Monmouth (Mr. Thorneycroft) and my hon. Friend the Member for Bristol. South-East (Mr. Benn)? These "Big Brother" tactics on the part of the Government are not at all satisfactory.

Mr. Butler: I cannot accept the insinuations made by the hon. Member. Since I have been a Member of the


House, and since these organisations of publicity have been established—namely, the B.B.C. and the rival organisation—accusations have been made from both sides of the House consecutively of alleged pressure. In the end, I think that we reached a certain meed of liberty.

Mr. Reynolds: In announcing the business for next week the Leader of the House referred to certain Private Bills and Private Members' Motions? Will he give consideration to the notice which is posted in the Division Lobby, a copy of which he has read, in order that it should include in greater detail all the business to be discussed in the House? There would then be at least one place in the Palace of Westminster where an hon. Member could see on a notice all the business which is to be discussed, instead of having to read the statement by the Leader of the House, then look at the Order Paper for Private Business, then look at the Notice for the Adjournments and then see whether there is a notice of a Ten Minutes Rule Bill.
Can the right hon. Gentleman see that in the Division Lobby, to start with, while negotiations continue about the Order Paper of the House, there is a notice for each day's proceedings?

Mr. Butler: I had the pleasure of meeting some new hon. Members from this side of the House yesterday, and this was a point in which they were interested. There are hon. Members on both sides who would like things set out a little more clearly. This will mean a little consultation. I suggest that I should reserve my position today and study what the hon. Member has said.

Mrs. Castle: Does the Leader of the House remember that as long ago as before Christmas we said that we wanted a debate on accommodation and that it

must be a full day's debate? As this affects the working efficiency of Members in the discharge of the rest of their duties, ought it not to have greater priority than that which he has given to it?

Mr. Butler: I think we should try to fit it in as soon as we can. I certainly agree that it is important. We got through our debate on procedure successfully, I think, and I am prepared now to have a debate on accommodation.

Mr. Swingler: Can you, Mr. Speaker, or the Leader of the House now say whether the Civil Estimates for next week are exempted business? Will backbench hon. Members on either side be in order after the debate in raising detailed questions on the subject? May we be told whether that is the position?

Mr. Speaker: The Vote on Account is not exempted business. The rest of the question, I suppose, is for the Leader of the House.

Mr. Manuel: I hope that the Leader of the House is seized of the importance of arranging an early debate on the railways. It is all very well to say that we are to have a statement, but if debates are allowed on the B.B.C., virtually Government-sponsored, while train crews are leaving their employment on the railways, thus making it impossible for the Commission to run trains which are urgently needed, surely it is time that the House heard the views of the responsible Ministers so that action may be taken to have normal train services running throughout the country?

Mr. Butler: It is quite clearly in the interests of the House to discuss this matter at a not-too-distant date. I have noted the hon. Member's views.

Mr. Manuel: Thank you very much.

Orders of the Day — IRON AND STEEL (FINANCIAL PROVISIONS) BILL

Order for Second Reading read.

3.50 p.m.

The Minister of Power (Mr. Richard Wood): I beg to move, That the Bill be now read a Second time.
I hope that the House will be able to agree to this Motion. This Bill is merely concerned with the method of financing the loans to Colvilles and Richard Thomas and Baldwin's which were announced some time ago, and the sum which is mentioned in the Bill—I should like to give this undertaking right at the beginning of my speech—will not be available for any loan except those two which have already been announced and to which I should like to refer in greater detail a little later.
Section 5 of the Iron and Steel Act, 1953, enables the Minister, with the agreement of the Treasury, to undertake, or arrange to have undertaken, any development which he considers necessary in the national interest and which would not otherwise be carried out. The Act was so framed that any loans that I or the Ministry of Power may make for this purpose would come out of voted moneys which would appear in the Estimates of my Department and this seemed, for reasons which I shall try to explain to the House, inappropriate for the very large commercial loans of the kind which we were proposing and of which the House has already been informed.
Such loans are normally made by the Treasury out of the Consolidated Fund and they are accounted for, as the House knows, in the Budget, below the line. Therefore, the purpose of the Bill, no more and no less, is merely to provide for loans to Richard Thomas and Bald-win's and Colvilles to be met from the Consolidated Fund, below the line, instead of from my Department's Vote, above the line.
I hope that after the explanations which we have had year by year by successive Chancellors of the Exchequer there is no mystery about the division between expenditure above and below the line, and that any amateur explanation that I now give will not damage

the clarity that exists. Expenditure below the line is nearly all capital expenditure. On the other hand, not all capital expenditure falls below the line.
The difference, broadly, is between outgoings which are repayable and those which are not. Direct Government capital expenditure on assets that produce no revenue, such as roads, hospitals and schools, go above the line, but things like capital expenditure of the Post Office, loans to new towns, to local authorities and to nationalised industries, which produce revenue and are repayable, are placed below the line. Therefore, to sum up this elementary lecture to most hon. Members, the shortest definition of expenditure below the line is expenditure which the Government have power to finance by borrowing.
To come back to the Bill, these loans to the steel companies, which are very large commercial transactions and which attract interest like loans to nationalised industries at a rate related to the rate at which the Government can borrow, and which should be repaid out of earnings within a period of years, should, in our view and, I hope, in the view of the House, certainly be made below the line and the Treasury should have power to borrow for the purpose.
That is the import of subsections (1) and (4) of Clause 1. The Bill has no sinister intent. It is merely that we feel that it would inflate the Estimates of my Department and swamp the ordinary Departmental expenditure, which, I am glad to say, in the case of the Ministry of Power, is relatively low, possibly to the detriment of proper Parliamentary scrutiny if we continue to provide for this expenditure through Votes.
This is a matter of no great practical importance in this financial year 1959–1960 when, of these loans, no more than about £1 million will be provided, but the whole of the remainder of about £30 million a year, on average, will have to be provided in the next four or five years. I hope therefore that the House will agree that this should be provided in the same way as other substantial loans which the Government make for commercial purposes.
I should like to say a word or two about the background of the loans to which the Bill refers and the reason why


the Government decided some time ago to make them. The Iron and Steel Board, in July, 1957, published a special Report on Development in the Iron and Steel Industry and drew attention, among other things, to the need for an additional hot strip mill by about 1962, to meet the future demand for steel which would be required for the motor industry and for durable consumer goods, such as refrigerators and many other things.
There followed from that Report a great deal of public discussion on the siting of this mill and, at that time particularly, on the effects of the siting on employment. The rival claims of both Wales and Scotland were, as hon. Members will well remember, strongly urged by their supporters. The financing of the new mill presented a considerable problem, because it was perfectly clear that a large amount of capital would be necessary and that this capital would be unlikely to yield results for some years. An important factor in the situation was the uncertainty which then prevailed before the election, in view of the declared policy of the party opposite.
Technical opinion at the time favoured a new plant to be situated near Newport, in Monmouthshire, and it seemed fairly obvious that Richard Thomas and Baldwin's would be logically the company to undertake the development. But in the summer of 1958, about eighteen months ago, Colvilles, of Scotland, proposed a semi-continuous strip mill additional to their development at Ravenscraig, and it was the company's ability to carry out the project in association with its new work which made this a viable and attractive proposition. It was dependant at that time on the willingness of the Government to provide finance.
After consulting the Iron and Steel Board, the Government agreed to give financial help, and the Prime Minister, in the House, on 18th November, 1958, made a fairly long statement in which he made it clear that the Government accepted the recommendation of the Iron and Steel Board that additional capacity was necessary for the production of strip mill products. My right hon. Friend also made it clear that the additional capacity could include two major strip mills to be built by Richard Thomas and Baldwin's and Colvilles and that the Government would advance such funds

as the companies could not provide from their own resources.
The House was subsequently told, on 21st January, 1959, of the terms on which the Government would advance up to £50 million to Colvilles. The new scheme, as then planned, was to create capacity in Colvilles for an extra 250,000 tons of sheet and 250,000 tons of other products.
To follow the story through, on 13th March, 1959, the Howe was told of the terms on which up to £60 million would be lent to Richard Thomas and Baldwin's. Lastly, I told the House on 16th December last, in Answer to a Question from my hon. Friend the Member for Aylesbury (Sir S. Summers), that the maximum amount of the loan to Richard Thomas and Baldwin's would be increased from £60 million to £70 million. This was to enable the company to accelerate the scheme and to extend it with the approval of the Iron and Steel Board so as to provide nearly half as much sheet steel again—in fact, 235,000 tons a year in addition to the original extra 600,000 tons.
It is important to put on record that there was no dissent in the House when the Prime Miniser made his announcement, except some expressions of regret from the proponents of either Scotland or South Wales that the whole of the new capacity was not to be placed in one or the other. There was no criticism—this is important—of the Government's readiness at that time in 1958 to help the financing of these projects.

Mr. John Cronin: This was done by way of statement after Question Time. There was no way of criticising it, except for the very limited number of Questions which are permissible when such a statement is made.

Mr. Wood: There was a very ion period of questioning. I should certainly have the House with me if I suggested that any serious criticism can generally find its way on to the Order Paper in one way or another.
I should like to carry this forward to the present day and say a word about the current market situation for steel.

Mr. Gerald Nabarro: Before my right hon. Friend goes on to


deal with entirely different considerations, will he apply himself for one moment to the particular method now produced for financing the £120 million? What perplexes many of my hon. Friends and myself is that the Iron and Steel Holding and Realisation Agency is in existence for the specific purpose of making loans, among other things. Why does not the Agency carry out functions of this kind? Why has there to be a special Bill and a new method of financing?

Mr. Wood: My hon. Friend is on a very sensible point, but we felt that these two loans were of a kind which the Agency had not been created to make. The Agency was created, as my hon. Friend will agree, for entirely different purposes. We felt that it would be right to place responsibility for these loans elsewhere.
I will now deal with the current market situation for steel. Home demand in 1959 and at present is dominated by the rising output of motor cars. There is also, as the House knows, an increasing demand for domestic equipment, for containers for food and industrial materials, and in the building industry. On the other hand, there is a slackening demand in the shipyards, on the railways and in the coal mines. But demand for steel abroad is still strong for most products, and exports are running at a considerably higher level than imports.
Production, on the whole, is rising and is expected to reach 24 million ingot tons this year, which is very near to maximum capacity of the industry. Supply difficulties have been appearing for some products and some users are importing part of their needs, but the only substantial imports are of sheet steel, which may amount to about 200,000 tons this year.
The sheet steel position has given some hon. Members cause for concern. Demand for sheet steel rose abruptly in 1959 by about 14 per cent. This, when combined with teething difficulties at certain steel works and at a time when the American strike prevented us from filling in gaps of supply from abroad, gave rise to certain difficulties in sheet supplies. We probably might not have heard quite so much about these difficulties if sheet steel in the United Kingdom had not been a good deal cheaper

than imported supplies. It is fair to say that our continuous strip mills are among the most efficient in the world, and the low costs that this makes possible are bound to be a substantial help to manufacturers and exporters of engineering and metal goods.
It is important to remember that indirect exports of steel in this form are becoming more and more important to our economy. Before the war they amounted to only about 1 million tons. They are running now at about 3 million tons for this kind of product.
Comparing direct steel imports and exports, we have a substantial balance of net exports. Even in sheet steel, where the position is graver than in the rest of the industry, exports are still greater than imports. On quantity alone we could dispense with all imports. In practice, however, the quality varies and we have not yet enough cold-rolled sheet steel from continuous mills, which is the quality which the motor industry demands.
The shortage of sheet steel should disappear in 1962 when the new mills now being built at Newport and Ravenscraig begin to come into operation. After 1962, capacity will show a margin between supply and demand, both for sheet and tinplate, but at the same time demand is rising so that it will probably be only a few years before demand catches up with supply. Moreover, experience suggests that the availability of supplies itself creates a demand. It is, therefore, far better to have spare capacity, which will, in any case, be needed sooner or later, than to run the risk of falling short of supplies.
The question of denationalisation has been exercising the minds of some hon. Gentlemen recently. The Bill, as I have tried to explain, is in no way concerned with questions of denationalisation, but draws attention to the large loan which the Government are making to a company still in public ownership, Richard Thomas and Baldwin's. The House may wish to know how the intention to make this loan affects the progress of devesting the remaining assets which are held by the Iron and Steel Holding and Realisation Agency. Therefore, it would be timely to state the Government's policy on this.
We took powers under the Iron and Steel Act, 1953, to return the industry


to private ownership according to what we then considered, and still consider, to be the best interests of the national economy. Since 1953, we have pressed forward as quickly as possible and having regard to all the circumstances with the implementation of that policy, and much has been accomplished. I cannot deny that the process has been made more difficult by the uncertainty which has been overhanging the future of the industry because of the declared intention of the party opposite to renationalise it if they were returned to power last October.

Mr. Ellis Smith: That declaration has been repeated.

Mr. Wood: I hope that that uncertainty has now been dispelled.
I wish to take this opportunity of pay-a tribute to the skilful and devoted work of the Agency, especially under its former chairman, the late Sir John Morison, in carrying out the policy laid down by the Act.

Miss Margaret Herbison: Before the right hon. Gentleman leaves this point, could he tell the House whether Colvilles was as anxious and eager to provide this sheet steel as was Richard Thomas and Baldwin's—the nationalised industry?

Mr. Wood: I have been trying to explain to the House that Colvilles and Richard Thomas and Baldwin's entered into an agreement at the same time to provide the sheet steel if the Government were willing to provide the finance for it. That is the position, as the hon. Lady knows.
I was about to say that the remaining holdings in the Agency fall into four parts. First, come the fixed interest securities; secondly, comes Richard Thomas and Baldwin's, which is the largest firm still in public ownership; next come the 10 smaller companies; and, lastly, there is the outstanding loan by the Agency to the Steel Company of Wales. The Agency, therefore, is proceeding as rapidly as it prudently and properly can towards the completion of its statutory functions.
I do not believe that it is either desirable or right to specify a detailed programme or timetable, but I am quite

certain that the programme of disposals must take account, first, of the state of the market, secondly, of the demand for the different kind of security and share capital that these holdings represent, thirdly, of the nature of the undertakings, and, fourthly, of the requirements of the Iron and Steel Act, 1953, that the Agency, without disregarding other relevant matters should secure, in the words of Section 18,
… that the consideration obtained from the disposal of assets is financially adequate …
All that I feel it necessary or desirable at present to say is that the programme of disposal will continue, but that the manner in which the programme is carried out, and the timetable to which it will conform, must be matters of judgment on which it is not possible to lay down rules in advance.

Mr. Cronin: I wonder whether the right hon. Gentleman appreciates that it is rather unsatisfactory that the House should have this very limited information. He asks for powers to make a gigantic loan from the Consolidated Fund, but the House is not told to whom it is to be made. Is it to be made to a publicly-owned industry, or to a private show?

Mr. Wood: I think that the position has been perfectly clearly stated. The loan has been arranged, some time ago, between the Government and Colvilles, on the one hand, and Richard Thomas and Baldwin's, on the other.

Mr. Cronin: I am talking of Richard Thomas and Baldwin's.

Mr. Wood: Yes. I have announced that the Agency intends to dispose of its present holdings, which will certainly include an intention to dispose of the remaining holdings in which Richard Thomas and Baldwin's.

Mr. Jack Jones: The Minister is usually extremely fair to the House. Will he be fair to the House today and, through the House, to the country, by saying, here and now, how eminently successful Richard Thomas and Baldwin's has been since being publicly owned in the national interest?

Mr. Wood: I am certainly willing to admit that Richard Thomas and Baldwin's has made considerable progress, and I hope that it will continue


to make considerable progress in the future, whether it continues for a time under public ownership or returns to private hands.

4.14 p.m.

Mr. H. A. Marquand: We on this side of the House are, of course, very glad that this big new additional capacity for the production of sheet steel is to come about. We are glad, as the right hon. Gentleman has told us, that the programme has been accelerated within the last few months by nearly 50 per cent.
In the pamphlet that we published in March, 1959, we drew attention to the grave danger that the programme of expansion put forward by the Iron and Steel Board might not be fulfilled. The Board had proposed, and had very definitely advocated in its Reports, that enough capacity to produce 29 million tons of steel should be available by 1962, and that one of the largest items of the programme should be a fourth strip mill.
In July, 1957, however, the Board reported that
There is a divergence of view as to when this development should be undertaken … the industry think that the necessary load for a new plant would not be available for some years after 1962. If demand were of the order estimated by the Board there would be a serious deficiency in the supply of sheet and tin plate in 1962. This problem is still under discussion with the interests concerned.
That was, indeed, a sharp divergence of opinion, was it not? The difference of opinion was between the Iron and Steel Federation and the Board. Subsequent events have now shown how utterly wrong in its calculation the Federation was, leaving one seriously to doubt whether its advice that the programme should not be proceeded with was based entirely on strict statistical calculation, or whether it was influenced by the self-interest, or the supposed self-interest, of those who were already producing strip somewhere else.
When one looks at the figures it is quite clear that the Board was right and that the programme should be undertaken, and when the Minister now tells us that he has actually accelerated one part of the programme it shows that the Board was right, and that the Federation was obstructing the issue. We have our

own suspicions of the Federation's motives in obstructing the Board then.
It is quite clear, I think, that at that time the Board's influence and power were not strong enough to get this essential expansion under way quickly enough. The Government, too, lagged behind. Although the Report had been published, and the Board's recommendations and the difference of opinion had been published in July, 1957, it was not until November, 1958, that the Prime Minister announced that the Government would support and encourage the building of new strip mills at Newport and Ravenscraig. Thus, eighteen months were lost because of the lack of power in the hands of the Board and the timidity of the Government, in the face of vested interests, and their unwillingness to plan for an expanding economy.
Had the Government shown more determination to plan for an expanding economy, we should now be talking not in terms of 29 million tons, but more in terms of 30 million tons of production in 1962; or perhaps, of a sixth strip mill, although I am not sufficiently expert on steel to venture such a prediction—

Sir Spencer Summers: The right hon. Gentleman is now advancing arguments which contrast a figure of 29 million tons, or thereabouts, for the whole steel industry, with the provision for a very small section of it—the sheet steel section. Many of his arguments are quite irrelevant to the sheet steel part of the industry.

Mr. Marquand: My argument was, of course, devoted deliberately to one very large section of the increase in output which the total target of 29 million tons would involve, namely, the very large section of the increase for the sheet steel section. I would be very glad to hear the explanation of the hon. Member for Aylesbury (Sir S. Summers), because he really does know a great deal more about this than I do. I would be very glad to hear his explanation of the long delay in the bringing forward of this necessary part of the overall programme, namely, the production of steel strip.
Perhaps the hon. Gentleman will tell us later about that. It would take him too long to do so in an immediate intervention, but let him tell us—I hope that


he will—who obstructed the programme: who it was who held these opinions that were different from those expressed by the Board, which was supposed to be planning the steel industry on behalf of the Government. We should very much like to know.
We focussed attention on all this before and during the General Election. We focussed attention on this conflict of interest between certain steel producers—and, particularly, the producers of sheet steel—and the Board. We focussed attention on the high probability, as the Board has told us in its annual Report, of a shortage of steel in 1962. We focussed attention on all these things, and other matters like the prospective shortage of home ore supply, before and during the election campaign.
The election was hardly over before a shortage showed itself. The right hon. Gentleman said just now that it showed itself suddenly and unexpectedly. It was not so surprising to us, as it seems to have been to him, that a shortage manifested itself. We regretted very much that the economy was not allowed to expand during 1957 and 1958 and that it had been deliberately held down by Government policy during those years, but we knew, of course, that, once the election was over, the chances of expansion might begin to show themselves again. [HON. MEMBERS: "Hear, hear."] Of course.

Mr. Jack Jones: Before the election 60 per cent. of the industry was on short time.

Mr. Marquand: We knew that the economy was screwed down and held down in every particular, by the credit squeeze, and so forth, before the election. We knew, also, that the brake was deliberately taken off just before the election, and we knew that it was inevitable that we should have a repetition of what happened at the 1955 General Election—a boom deliberately created at the time of the election succeeding a slump deliberately created before.

The President of the Board of Trade (Mr. Reginald Maudling): I must just tell the right hon. Gentleman that he is about a year out in his remarks.

Mr. Marquand: As long as I am not out in the principle that the slump was

deliberately created before the election, and the boom began to take place just in time for it, I do not mind very much if I am caught on a detail of timing. The right hon. Gentleman has admitted that it was as a result of the appearance of the forecast shortage of sheet steel and tinplate that the acceleration of the original programme at Newport took place immediately after the election.
The Bill asks for finance for two companies, a total of £120 million, for which £70 million is required for Richard Thomas and Baldwin's. This company recently presented its annual report. According to the advertisement of the chairman's speech, which we read in the newspapers, it was presented to the annual general meeting. I do not know who was at the annual general meeting. If all the shareholders had been there, there would have been 52 million of them, since the company belongs to the nation. This afternoon, we still represent the shareholders of the company. We are the representatives of the people who own the shares.
Let us take this opportunity, before we go any further, to look at the record of the company which we own. The Agency, which is our agent for owning the shares, never tells us anything about its wholly owned subsidiaries. Under the Act, it is charged with the duty of administering its subsidiaries in a competent and businesslike manner, or words to that effect. We never have a report from the Agency about this at all. Never has the Agency published any account of the companies which it owns as steel manufacturers. All it gives us is annual statements of the holdings of the Agency with the various items in a balance sheet. The report is presented as if the Agency were no more than what it was originally intended to be—a receiver.
The record of the company is a very proud one. To concentrate only on the annual report and not to attempt to go through the whole history of it, during the last year the company spent over £9 million on capital development. It records an increase in its manufacturing and trading profit, compared with the previous year, of £2,150,552, a very good profit. Sometimes, hon. Members opposite are surprised to hear us on this side refer to profits. We refer to these profits with a great deal of enthusiasm, for the simple


reason that they belong to the nation. The whole profit accrues to the benefit of the nation and nobody else.
The company has a very good productive record. It tells us that it introduced the first wide continuous strip mill in this country, in Ebbw Vale, of which we are all very proud, especially those of us who lived in South Wales years ago. I wish very much that my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) could be here this afternoon to speak about it, because I know that he would very much like to do so. [HON. MEMBERS: "Hear, hear."] He will be back very soon, I hope.
Now the company is taking the first steps in the development of the continuous casting of wide slabs, and it will soon introduce at Ebbw Vale the L.D. oxygen top blown process for making steel, which, I am told, will largely revolutionise the actual manufacture of steel in future.

Mr. Jack Jones: About twenty years overdue.

Mr. Marquand: The L.D. oxygen process was, of course, developed by the nationally owned steel industry of Austria. How appropriate it is that a process developed by the nationally owned steel industry of Austria is now to be used by our nationally owned steel company.
The chairman was fully entitled to say:
This is a company with a restless and forward looking outlook, inquiring but not credulous, tough but humane".
He said, also:
We are fortunate that we have as Managing Director Mr. H. F. Spencer, a man of energy, imagination and infectious human qualities and that he is backed by a body of able and skilled enthusiasts".
We join in this tribute to the managing director and I, for my part, rejoice that the new works to be established at Newport will be named after him. It is, of course, absolutely right that public money to finance development should go to this publicly owned company which has done such a fine job.

Mr. Nabarro: No.

Mr. Marquand: We can vote the money without any misgivings whatever to this company for these purposes—

Mr. Nabarro: No.

Mr. Marquand: —not only because of the technical excellence of its record and its present undertaking but because we know, as I have pointed out already, that the whole profit will come back to the nation and no one else. We are investing our own money in our own company and we alone derive the benefit from it. What could be better than that? What objection could possibly be found?
The Minister spoke about the Agency, which has been at work for about seven years—I shall return to its record in discharging its functions in a few minutes—and hinted that at some time or other—he did not say when; I wish that he had been a little more precise—the Agency might attempt to sell Richard Thomas and Baldwin's back to the speculators. I warn the Government now that, if there is any messing about with this fine public enterprise, there will be an explosion of anger among the iron and steel workers of our country. They do not want the profits for themselves. They want them to go to the nation.
The iron and steel workers want to be assured that public service, and not private gain, will continue to inspire the directors of this concern. They want to be assured that there will be no handing over of the so-called equities, which are, in reality, free of all risk, to private speculators and finance houses so that they can scoop off the cream of the profits which public enterprise and the loyal co-operation of iron and steel workers have created.
I come now—the contrast is very illuminating—to the other company, Colvilles Ltd. I make no criticism whatever about this new development being undertaken in Scotland. There were, we know, certain technical differences of view about it. None of us here is really competent to pronounce upon those. In the 'thirties, I rejoiced, living in South Wales, that it was decided that the new strip mill should be built in Ebbw Vale and not in Redbourne, as some of the engineering experts suggested. I rejoiced because I thought that this was a proper assessment of the importance of social considerations in the location of industry.
It seems to me that exactly the same type of consideration made it quite right


to take the decision which has been taken to undertake this new project at Ravenscraig and not to do the whole job at Newport. There is no difference here. Of course, the work should be there and the decision, having been taken, should go on. What I want to underline is the sharp difference between the financial arrangements that we are asked to authorise in these two instances.
In Richard Thomas and Baldwin's the whole enterprise belongs to the nation, and the profits as well. In Colvilles, the control and the profits have been denationalised, but that is all. The present capital structure of Colvilles includes 10 million ordinary shares of the nominal value of £1 each. They were told to private owners by the Agency. There are 4 million 5½ per cent. cumulative preference shares and £10 million worth of 4½ per cent. debenture stock, all of £1 nominal value, still owned by the Agency.
Up to January, 1958—I will mention later what came after—that was the total capital—£14 million nominal value owned by the nation and £10 million ordinary shares owned by private holders, including insurance companies, and that kind of operator. On the £14 million, the maximum that could be earned for the nation was 5½ per cent. on part and 4½ per cent. on the rest, an average of rather less than 5 per cent. for the nation's ownership.
In 1955–56, although I admit that large and proper allocations were made to reserves, 11 per cent. was paid on the ordinary shares. In 1956–57 and 1957–58 the figure was 13 per cent.—less than 5 per cent. on the average for the Government who hold this capital to the event of £14 million and 13 per cent. for persons who bought pieces of paper from the Agency but had not contributed money by doing that to the development of the concern or towards the building of another single piece of steel capacity. All they did was to buy pieces of paper, for which they were rewarded to the extent of 13 per cent., whereas the shareholders of the nation received 5 per cent. for their money.
Now the Government come along with this proposal—a further loan of £50 million over five years at a rate of interest, as the right hon. Gentleman told us, related to the rate at which the

Government can borrow. The Government are to lend it at more or less the rate at which they themselves borrow. No profit there. We do not object to Government finance of the steel industry in principle, as I pointed out when dealing with Richard Thomas and Baldwin's. It is the cheapest way. It was the way used by the Steel Corporation of Great Britain, when it owned the greater part of the industry, to raise money. It was able to raise money at 3½ per cent. It had to pay only 3½ per cent. on what it borrowed and the profits went to the nation or were ploughed back for the building of new capacity.
As I have said, although we do not object in principle to the use of Government money for financing the steel industry, we say that two conditions should be attached. First, it can be justified only if a loan by the Government is accompanied by effective control, and, secondly, if it is not used as a method of increasing profits to those who have not subscribed to the development. If this new loan is provided at 5 per cent., evidently it will make possible a still further uncovenanted gain to the ordinary shareholders of Colvilles.
It was admitted that that would be so by Sir Andrew McCance, the chairman, when the principle of the new loan was announced by the Prime Minister. He told his shareholders that the new mill "should contribute to the general profits of the company." In other words, he said, "The Government will put up the money and you, my existing shareholders, will make something more over and above what you are making already from the use of Government money for this purpose."
There is a further aspect of the finance of Colvilles of which the House should be aware. In January, 1958, the company needed to find money for development. I am now talking about it doing this without help from the Government. It issued £6 million worth of 6 per cent. debenture stock at the price of 99 on the market. This was issued, not only at a price favourable to the subscriber, but the debentures were convertible into ordinary shares in multiples of £50 at stipulated intervals. When private persons provided that capital, they had a share in control. When the State, which is already providing 60 per cent. of this company's capital, is asked to lend even


more, no share in control is to be given. We therefore say that on its financial merits this proposal is outrageous.
I wish that it were possible to divide the Bill into two, so that we could table a reasoned Amendment expressing our displeasure and regret at this method of financing this company, which is neither nationalised nor denationalised, to the advantage of the shareholders who contributed nothing whatever to the development of the company. However, we cannot do so. We are strongly in favour of the first half of the proposal and, naturally, we shall not vote against the Second Reading, but we shall have to try to amend the financial provisions with regard to Colvilles at a later stage in our consideration of the Bill.
This process of financing Colvilles is by no means unique in getting cheap money from the Government for private shareholders as a basis for the enrichment of speculators. The latest Report from the Iron and Steel Holding and Realisation Agency shows that it still has £206 million worth of investments and loans in companies whose control has been sold to shareholders. The control and profits have been denationalised, but the nation is left holding this large sum, amounting in many cases to 60 per cent. of the total capital.
It is little wonder that the Financial Times index shows that steel shares today are, on average, worth 2½ times what they were in 1955 when this process of so-called denationalisation began to get under way. With £206 million of capital receiving no more than the current rate of interest, often less, and having no share whatever in the control, the Government try to pretend to us that they are denationalising the industry. This is not denationalisation. It is capitalism on the dole.
This is not the private enterprise that we were told about in our early days, when we were studying economics in the universities, or wherever it happened to be—the story of the entrepreneur putting up his savings and taking risks and getting large rewards as a result. Now in these recent days they are taking other people's money—the taxpayers' money—at cheap rates and using it to make profits for themselves, and even being given the entire control of the undertaking in doing so.

Mr. Nabarro: I am intrigued by the right hon. Gentleman's analysis of this position. He has just spoken about the taxpayers' money, but the Bill says the Consolidated Fund. Does he take the view that the Consolidated Fund is taxpayers' money?

Mr. Marquand: Well, of course it is.

Mr. Nabarro: I am grateful to the right hon. Gentleman. I merely want to tell him that the Minister of Power and his Parliamentary Secretary spent the whole of last Tuesday vehemently denying that the Consolidated Fund was taxpayers' money.

Mr. Jack Jones: All the money is taxpayers' money.

Mr. Marquand: I look forward with pleasure to hearing the hon. Member for Kidderminster (Mr. Nabarro) vehemently attacking his right hon. Friend on that point. There are many things on which they could be attacked. The hon. Member does not always attack them on the same grounds as I do, but the more attacks that are made on them the better I shall be pleased.
The Agency itself still holds capital in the steel industry to the extent of 60 per cent. and what it took over from the Corporation. The figures are in the annual report, and, scarcely vary. The amount which the Agency holds is down by only £2 million this year, as compared with what it was last year. Report after report has revealed the same situation—that 60 per cent. of what the Agency took over from the Corporation it still holds. Where, sometimes, it does sell back some of these holdings, it has immediately made a loan to the Steel Company of Wales, or whoever it may be, and thus brought the total sum up again.
If this is what the Government intended to happen seven years after they introduced this so-called denationalisation Bill, if this is the result, seven years later, of the Bill which I well remember the present Minister of Aviation introducing at that Box, if this is the result which the Minister of Aviation then intended, he was deceiving the nation at that time. The right hon. Gentleman never told us anything about this. He never said that he confidently expected that, six years from then, the Agency would still be holding 60 per cent. of


the stock of the Corporation which he proceeded to dissolve. If hon. and right hon. Gentlemen opposite repudiate any allegation that the Minister of Aviation was deceiving the nation seven years ago, then let them admit that their policy has abjectly failed. After seven years, it stands in ruins.
The lessons which we draw from these seven years seem to me to be clear. First, full public ownership of the steel industry under the Corporation was going well when it was destroyed. Secondly, where triumphed. Thirdly, planning has been made needlessly difficult under this system of an public ownership has been maintained, as in Richard Thomas and Baldwin's, it has Iron and Steel Board, as contrasted with that of the Iron and Steel Corporation of Great Britain. I am not attacking the Board in any way. I am sure that it is doing its very best, but its task has been made needlessly difficult by this system of planning. Fourthly, the lesson to be learned is that where public money is invested, it must and ought to carry the right of public control. The conclusion is obvious. Public ownership must be restored.

4.44 p.m.

Mr. John Peyton: I do not like this Bill.

Mr. Nabarro: A very good start.

Mr. Peyton: Nothing which the right hon. Member for Middlesbrough, East (Mr. Marquand) has said has altered my opinion of it, and even his rather wintry support for one part of the Bill has not, I am bound to say, altered my sympathies. I could have wished that the right hon. Gentleman would have cut down his rather long speech by omitting the now customary and traditional moan about stagnation in 1958. We have heard it all so often. If only he could have said, "We will not put in the usual hit about stagnation", it would have made his speech a little more palatable. The only time when I found it possible to agree with him with any warmth was in his reference to his colleague the right hon. Member for Ebbw Vale (Mr. Bevan). I should like to say how warmly we agreed with him in saying that we wish to see him back soon fully restored to health.

Hon. Members: Hear, hear.

Mr. Peyton: When the right hon. Gentleman, in a tired way, warned us of the explosion that would come in the event of Richard Thomas and Baldwin's being denationalised, I am bound to say that I, for one, did not tremble in my shoes, and I do not suppose that my right hon. Friend on the Treasury Bench trembled either at that warning, though I very much hope that he will tremble at, or at least take note of, some of the things which will be said from behind him this afternoon. We hope to see this thing happen, and the Government do what they said they would do in 1953—complete the return of the steel industry to private enterprise.
I want to make a very short speech. I do not think that it would be at all unhealthy for the House of Commons to contemplate for a moment the reasons behind the Bill. Some of us in the House will be obliged—or it would be more seemly for some of us—to carry out our contemplation seated on a stool of repentance, particularly hon. and right hon. Gentlemen opposite. This Bill is another illustration of the follies of nationalisation and the dilemmas with which one is confronted as a result. Again, it shows the unpleasant impact which this financing of nationalised industries has upon the Budget. I know that the right hon. Gentlemen opposite are all very coy about this subject, for reasons which I perfectly well understand, but I wish that there could be a little more candour from them in addressing themselves to the public about the effects which the financing of nationalised industries will have upon the Budget which my right hon. Friend the Chancellor of the Exchequer will introduce in about six weeks' time.

Mr. Marquand: The hon. Gentleman has said that he wished we could have more candour from this side. I thought that I had been as candid as I could be. I pointed out that £2 million came to us from the profits which nationalised industries had made.

Mr. Peyton: I hope that the right hon. Gentleman will follow that example. The right hon. Gentleman will find that that was concealed in a massive, cocoon-like framework, and did not emerge very plainly. I hope that he will stump the country reminding his followers in the Socialist Party of the effects of the bills presented by the


nationalised industry upon the Budget, and I very much hope that he will counsel more modesty and restraint on his right hon. Friend the Member for Huyton (Mr. H. Wilson) when he speaks in the Budget debates.
One of the principal reasons why the Opposition should be firmly seated on a stool of repentance, and one of the reasons for the Bill, is the idle, dangerous and damaging threat which they made before the General Election that they would re-nationalise the steel industry. The right hon. Gentleman was talking of stagnation, which he had the impertinence to do, but the party opposite brought about the stagnation in the steel industry, if it were possible, by cutting off that industry from its source of finance—the market. It was quite impossible for any steel firm to raise money in the market before the election, because of the irresponsible threat made by the party opposite.

Mr. John Diamond: Is my recollection at fault if I believe that time and time again steel companies came to the market and to their own Shareholders and offered shares to be taken up by their own shareholders with fresh money, and that time and time again those offers were oversubscribed?

Mr. Peyton: The hon. Member will find that in the last year or so before the General Election, when it became clear that the party opposite had decided to go through with this insane policy, steel companies found it impossible to go to the market and were afraid of doing so.
The point I want to make is that there is room on the edge of the stool of repentance for one or two members of the Government and I hope that they will put on a little scrap of sackcloth for their own part in this. I blame the Government to this extent, that they have been too strict in their observance of this modern, dangerous fashion of robbing an industrial Peter to pay a political Paul. That fashion has spread too far and is dangerous.
If my right hon. Friends want an expanding economy, the parts of the economy which should expand are those which are prosperous and thrusting forward. I put that as a general principle, outside our discussion of the Bill.

Mr. J. J. Mendelson: We would like to see that last remark on record. Are those of us who have steel workers in our constituencies to infer that the hon. Member is opposing expansion of the steel industry?

Mr. Peyton: I am not opposing any expansion. If the hon. Member will have courtesy to listen to what I have to say, I hope that he will find that it is clear.
I am saying that, in their desire to observe this dangerous fashion of robbing industrial Peters to pay political Pauls, my right hon. Friends have decided to split what should not be split. Economic considerations and all the other considerations which should have been dominant should have led to the conclusion to set up one strip mill in South Wales. I believe that the foisting of extra capacity on Colvilles was not right at the time it was done.
We now have the rather sad spectacle of the Government lending £120 million to two firms, one of which could go to the market in present circumstances, and the other of which, had the policy of denationalisation been pursued with more vigour, would also have been able to go to the market. As things are, those two companies are at the Government's door, and the Government have to carry the burden of their finances.
I suppose that it could not be called an announcement, but the indication which my right hon. Friend gave in opening the debate, that the Government were at least aware of a certain anxiety on the benches behind them to see Richard Thomas and Baldwin's denationalised, was welcome. I realise that it would be very difficult and even wrong for my right hon. Friend to make any specific announcement about date and times and terms, and so on, but I very much hope that the words which I am now saying, and which, I am confident, will be repeated by some of my hon. Friends—

Mr. Nabarro: They certainly will.

Mr. Peyton: —will not fall on deafears, because we very much hope to see this ridiculous experiment of public ownership buried, and buried for all time.

Mr. Nabarro: rose—

Mr. Peyton: I am well accustomed to the voice of my hon. Friend the Member for Kidderminster (Mr. Nabarro), but I am bound to say that I get a little frightened when, from time to time, he starts this sort of vaulting up and down motion. I hope that he will manage to remain still.

Mr. Nabarro: I am quiescent.

Mr. Peyton: I am much obliged.
I conclude by asking the House and the Government to pause for a moment and give a kindly thought to the taxpayer and to pass for a moment from the taxpayer to British industry, upon whose productivity and progress the stability of the economy, the standard of living and everybody's employment depend. I hope that other industries will not be called upon constantly to be the suppliers of funds for those whom the Government temporarily and rather sporadically desire to help.
I am certain that in present circumstances it would be impossible for the House to reject the Bill, because of the commitment which has so unfortunately been entered into, largely because of the foolish activities of hon. Members opposite; but I hope that the Government will not make a habit of this kind of thing.

4.57 p.m.

Mr. W. E. Padley: While my trade union activities are in the distributive trades, I have a strong constituency interest in the steel industry. The mid-Glamorgan Basin is a community of coal and steel. My hon. Friend the Member for Aberavon (Mr. Morris) and I share nearly 20,000 steel workers and 13,000 miners. Needless to say, steel was a lively issue during the General Election. Since I propose to speak strongly, I should tell right hon. and hon. Gentlemen opposite that the combined Labour vote in Aberavon and Ogmore rose by 3,000 and the combined majority by 2,000, so that if I speak strongly I speak with a mandate recently given by a community employed in the largest steel works in Europe.
Naturally, we welcome the plans to build the new steel mills. As a Welsh Member, I would have preferred the whole of the plant to have gone to Wales just as my Scottish friends would no doubt have preferred a larger share to

have gone to Scotland. As my right hon. Friend has said, the Member for Middlesbrough, East (Mr. Marquand) has said, these plants are long overdue.
It is right that the State should finance these projects, since private enterprise cannot and will not do so. But, as the hon. Member for Kidderminster (Mr. Nabarro) and the hon. Member for Yeovil (Mr. Peyton) have indicated, the time has come to expose the nauseating humbug and hypocrisy of the propaganda of the party opposite. Private enterprise, indeed! The election has been over a matter of weeks and yet the Government come for £120 million of the taxpayers' money to finance the steel industry, which is more than £2 a head of the total population of Britain.
It is important that we should analyse what is now emerging in Britain. The presence of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) reminds me of a lecture which he recently gave when he denounced certain aspects of the Government's economic policy as a form of bastard Socialism.

Viscount Hinchingbrooke: indicated assent.

Mr. Padley: The noble Lord nods his approval. I am glad that my memory, without reference to the newspaper, was correct. The noble Lord's phrase "bastard Socialism", though somewhat inelegant, is in its Saxon earthiness very expressive and describes the policy of the Tory Party on the steel industry.
It is quite clear that when Colvilles, Limited, receives this £50 million, something like six-sevenths of the company's total capital will have been provided from the public purse.

Mr. Jack Jones: And no control at all.

Mr. Padley: This is indeed strange for private enterprise. Richard Thomas and Baldwin's at present is still nationalised, but we know that it is part of the Government's plans to denationalise it, despite its magnificent record and profitability under public ownership.
Lest I be accused of political prejudice, I should like to read a short extract from the Economist newspaper of 13th February which says:
The new chairman of Richard Thomas and Baldwins, Mr. G. S. R. Eley, made no mention


of the possibility that the ordinary shares of this nationalised concern would be offered for sale to the public this year. But he did reveal that to supply the £110 million required for building the new strip mill RTB would borrow money from the Iron and Steel Holding and Realisation Agency over and above the maximum loan of £70 million from the Government … This suggests that the stock market will not have to bear the weight of new money for the strip mill as well as the denationalisation issue and that this issue is likely to be confined to an offer of ordinary shares, since the Ishra is still counted on as a supplier of further capital. The road is clear for this issue, especially as RTB's profits are likely, Mr. Eley says, to make another substantial advance this year.

Mr. Nabarro: The hon. Member very conveniently left out some important operative words from Mr. Eley's statement. May I acquaint him with them? They are very important. Mr. Eley went on, in the context of the loans from I.S.H.R.A., to describe such loans as being
relatively temporary in character and he said that he believed that RTB would be able to repay the Government loan by 1971, pay a proper return on its capital and provide the money for other developments without difficulty.
Why not quote that passage?

Mr. Padley: For the simple reason that reading from newspapers is always tedious and the longer the quotation the more tedious it becomes. I am very glad that the hon. Member has completed the quotation.

Mr. Nabarro: I am very vigilant.

Mr. Padley: The fact is clear that whether the issue of share capital to come with denationalisation is £20 million, £30 million or even more, Richard Thomas and Baldwin's will remain a publicly-owned concern with between two-thirds and three-quarters of its capital State-provided.
This really is a new species of economic organisation. This so-called denationalisation is in fact public ownership and private control, and I gladly accept the definition of it by the noble Lord the Member for Dorset, South as "bastard Socialism".

Mrs. Eirene White: I would call it "bastard capitalism".

Mr. Padley: Yes, or bastard capitalism.
We must examine in some detail what happens when this kind of organisation

and this type of financial control are established. We have a prototype in the Steel Company of Wales whose giant steel works at Margam stands on the edge of my constituency. Margam steel works were sited in mid-Glamorgan by a State planning decision of the former hon. Member for Bishop Auckland, now Lord Dalton. They were built in all their phases largely with public capital. They prospered under Labour and nationalisation right up to the so-called denationalisation in March, 1957, when £40 million of ordinary share capital were sold to private persons. Today, £105 million from the public purse have been made available to the Steel Company of Wales, and of the £105 million, a sum of £88 million has been used to build blast furnaces, steel mills and so on.
There is a balance of £17 million outstanding, and we learn from Mr. Harald Peake, the chairman, in his speech to the company, that part of the £17 million is likely to be used for the new development plan which the Steel Company of Wales has in mind. Therefore, more than two-thirds of the capital of the company is public money. The only noticeable result of this bogus denationalisation in March, 1957, has been to place an enormous burden of new charges on the company.
Under Labour and nationalisation, capital was provided at 3 per cent., or 3½ per cent. In more recent times, under the dear-money Tory régime, capital has been provided to nationalised industries at 5 per cent., 5½ per cent., and 5¾ per cent. On the £40 million of ordinary share capital private shareholders have received 8 per cent. in 1957, 9 per cent. in 1958, and, last year, 10 per cent. dividend. The company produces rather more than 2 million tons of steel a year, and production is likely to rise in future to 3 million tons and beyond. If one contrasts the present 10 per cent. dividend with the 3½ per cent. as the charge for capital under Labour and nationalisation, the burden is more than £1 per ton of ingot steel produced by the company last year.

Mr. Jack Jones: The highest in the world.

Mr. Padley: If one takes the 5 per cent. or 5½ per cent. for public capital under the dear-money Tory régime, one


finds that the additional burden is a fraction less than £1 on the price of every ton of ingot steel produced. Yet we hear speeches from Tory platforms which argue that denationalisation was required to improve efficiency and to increase competitive power in foreign markets. I must say that it is a peculiar method of increasing efficiency or competitive power in foreign markets to adopt policies which add the equivalent of £1 to the price of every ton of ingot steel produced by the most modern steel works in the world.
But this is only the beginning. The Times in its City page of 6th August, 1959, quoted the view of a leading firm of stockbrokers in the City of London that a Tory victory in the General Election would raise the price of the shares of the Steel Company of Wales from £1 to £2. I spent some time during the election campaign expressing my own view that this was an under-statement. Following the Tory victory the price of the 20s. shares rose to a peak of 55s. 9d. In view of the recent rise in Bank Rate, and a few other factors, the price has slipped back a little, but it is clear that a tax-free capital gain of the order of £60 million has been made by the owners of the £40 million Ordinary share capital in the Steel Company of Wales, an issue made as recently as March, 1957.
I put it to hon. Gentlemen opposite: can that be defended on moral grounds or on grounds of public decency? My hon. Friend the Member for Rotherham (Mr. Jack Jones) used the word "racket", and that is certainly the word which occurs to the steel workers of Britain when they see these enormous financial burdens placed on their industry, and the enormous tax-free capital gains made at the expense of their efforts in the service of the nation. The propaganda of the steel masters, who are really financiers, and of the party opposite, pretends that this does not matter because the widows and orphans and the pension funds own the Ordinary share capital. Of course, we know that the 156,000 persons who own one-third of the total private property of Britain own almost one-half of the Ordinary shares quoted on the London Stock Exchange.
If one really wants to know who has moved into control of the steel industry as a result of the bogus denationalisation,

one has only to refer to "Who's Who" and read the description which the chairmen of the steel companies give of themselves in that work of reference. For instance, the chairman of the Steel Company of Wales, Mr. Harald Peake, brother of a well-known Tory politician now in the other place, describes himself as vice-chairman of Lloyds Bank, director and sub-governor of London Assurance, director of the National Bank of Scotland, director of the bank of London and South America, director of the National Bank of Australasia and chairman of the London Board, director of Rolls-Royce, director of William France Fenwick and Co., chairman of Hargreaves (Leeds) Limited and, as an afterthought, chairman of the Steel Company of Wales which owns the largest steel works in Europe. I quote those facts not because of any personal animus against Mr. Harald Peake or his family, but simply to demonstrate the financiers who now control the industry and who, in their own persons, represent that amalgam of banking, insurance and heavy industry which is the property base of the party opposite.
Therefore, as £120 million of public money for the steel industry is voted by this House today and in the coming weeks, we should remember that it is not a loan. It is clear from our experience to date that maximum prices fixed by the Iron and Steel Board are such that the most efficient modern plant, selling at those prices, is able to plough back very much larger sums than the general average of the industry. So when we have a great company, more than two-thirds of the capital of which is publicly provided as in the case of the Steel Company of Wales—it looks as though it will be considerably more in the case of Colvilles and Richard Thomas and Baldwin's—we have steel works, built largely with public capital, not only producing steel which the nation needs, not only paying dividends and interest on ordinary share capital and publicly provided capital, but also providing surplus wealth which will enable the State to be repaid.
The £120 million, therefore, will find its way into the pockets of the private shareholders as tax-free capital gains in the future—

Mr. Nabarro: Jolly good.

Mr. Padley: This is the new method of the private accumulation of capital by so-called denationalisation, bastard Socialism, or call it what you will. We cannot vote against the Bill today but it will need to be drastically amended. Should its Long Title prevent us from moving adequate Amendments to ensure that these State funds are used to acquire equity capital which gives control, then in my view it will be necessary for some of us in this House to introduce Private Members' Bills to transform the publicly-held capital in the Steel Company of Wales today, and of Colvilles and Richard Thomas and Baldwin's in the future, into share capital so that we get State control as well as State ownership.
Since hon. Gentlemen opposite have already thrown jibes about nationalisation across the Floor today, I say that nationalisation is really a politically neutral term—[Laughter.]—

Mr. Peyton: That is the best I have heard.

Mr. Padley: I am glad the hon. Gentleman is laughing because it is necessary that this point should be put over. In the light of semantics, if nationalisation is carried out by a Socialist Government, and the Socialist Government continues in power for a long period, nationalisation becomes socialisation, with the adequate participation of workers and consumers in control.

Mr. Ellis Smith: May it be soon.

Mr. Padley: If, however, nationalised industries exist for long periods under Tory Governments, nationalisation tends to become Tory-isation, and when hon. Gentlemen opposite attack features of the mining industry or the British Transport Commission, they are not attacking nationalisation in its Socialist sense; they are attacking nationalised industries which have been shackled and crippled by the policies of this Government which does not believe in nationalisation as a proper form of economic enterprise.
That is why, although we cannot vote against the Bill today, we must seek to amend it drastically, to ensure that when the nation owns so also shall the nation control.

5.19 p.m.

Mr. J. Enoch Powell: That was a fascinating piece of semantics, as the hon. Gentleman the hon. Member for Ogmore (Mr. Padley) called it, with which he concluded his remarks. However, in the course of his speech he had fallen into the same fallacy as his right hon. Friend the Member for Middlesbrough, East (Mr. Marquand) in regard to the money subscribed for the purchase of equity in the denationalised steel companies.
The right hon. Gentleman referred to the £13 million which had been paid for "pieces of paper". The hon. Gentleman referred to the £40 million subscribed for the equity of the Steel Company of Wales. Both failed to observe, or failed to remind the House, that the £13 million and the £40 million had provided the Realisation Agency with the means of making further advances, and were therefore private savings, invested—voluntarily invested—in the steel industry.
The hon. Member appeared to deplore the rise in the price of steel shares in recent months; but in doing so he overlooked the fact that the practical effect is to enable the Steel Company of Wales to finance its further development at a lower rate of interest. In fact, his observation ran clean counter to the assertion which he made earlier in his speech that private enterprise cannot and will not do the job of financing the further development of the steel industry.
I want to return later to that matter, which is indeed the real central point in this debate; but it would not be right entirely to overlook, as we have done so far in the debate since my right hon. Friend resumed his seat, the technical purpose of the Bill; for it is a purpose from which no one, I believe, can dissent.
It is really quite unsatisfactory, if large sums are going to be advanced by the Exchequer for repayment over a period, that they should be accounted for above the line, so that the outgoings are inserted in Estimates but the incomings disappear among Exchequer Extra Receipts. It is therefore a clear improvement in accounting and accountability that these sums, out and in, should appear in the Financial Statement below the line.
Ironically, this accounting change does, in fact, give the House more opportunity than it would otherwise have of debating the destination and policy of these payments; and here I revert to a point which was touched upon earlier this afternoon by my noble Friend the Member for Dorset, South (Lord Hinchingbrooke). It is ironical, and yet it is a fact, that large sums inserted in Estimates can only with the greatest difficulty be isolated and specifically debated by the House of Commons when it votes them, whereas we do have the opportunity of debating the destination of sums which are advanced as loans under enabling Measures such as the one now before the House.
This Bill is, indeed, directed to two specific destinations of loan money. Though they are not specified in it, they have been mentioned throughout the debate. I agree in this with the right hon. Member for Middlesbrough, East, that entirely different considerations apply to the use of such finance for the purpose of Richard Thomas and Baldwin's and for the purpose of Colvilles Limited. Richard Thomas and Baldwin's being at present in public ownership, the only source of external finance for its development, as long as it remains in public ownership, must of necessity be advances from the Exchequer. There is, however, a very significant—and I hope it will be practically important—provision in the agreement between Her Majesty's Government and Richard Thomas and Baldwin's, the terms of which were announced in March last year. That Clause, which is the last Clause of the agreement, runs as follows:
The arrangements set out in this Memorandum may be revised in whole or in part if the Agency wish to reorganise the capital structure of the Company.
What I believe is important in regard to this aspect of the Bill before us, is that the fact, the size and the timing of the advances made to Richard Thomas and Baldwin's should be such as neither to prevent nor hinder the restoration of that company to private ownership or—putting it in what I believe are more correct terms—the re-integration of that part of the steel industry into the economy of the country as a whole.
I was glad to hear what my right hon. Friend had to say this afternoon on that subject and I hope that use will be made

of the provision in the relevant agreement to ensure that the supply of capital under the powers of this Bill in no way interferes with the earliest practicable denationalisation of Richard Thomas and Baldwin's.
Colvilles Ltd., of course, is a firm of which the equity and the control are in private hands. It is a part of the private enterprise system. Embodied in its capital structure are, indeed, large amounts of debenture capital held by the Government. Nevertheless, that firm is integrally a part of the private enterprise system which covers by far the greater part of our economy.
I do not believe that, as a matter of settled policy, the borrowing of money on Government credit to be advanced to private enterprise on economic grounds can be justified or defended, or is, indeed, consistent with that policy of denationalisation to which my right hon. Friend once again this afternoon affirmed his adherence.
Of course, a case of varying cogency can be made out for the application of public money to secure non-economic purposes, to secure that private enterprise behaves in ways in which it would not behave in response to economic factors. But that is not what is at issue here. Section 5 of the 1953 Iron and Steel Act—which, of course, is the provision which governs everything that will be done under this Bill—makes it perfectly clear that the criteria to be observed if advances are made under the powers of that Section are purely economic.
The Section instructs the Iron and Steel Board to "consult from time to time with iron and steel producers" etcetera.
with a view to securing the provision and use of such production facilities in Great Britain as may be required for the efficient, economic and adequate supply of iron and steel products.
It is thus a purely economic criterion to which the Iron and Steel Board is directed in those consultations to have regard. Later in the Section, where powers of advancing money are given to the Minister, we see that they only come into effect if
the Board report to the Minister that they cannot secure by means of consultation under subsection (1) of this section the provision and use of the additional facilities required.


The criterion here being applied—which, indeed, under the parent Act must be applied—is again a purely economic one.
In fact, the Iron and Steel Board tells us in its Report for 1958 that it did so report to the Minister. It reported to him—paragarph 85 of the Report—that Richard Thomas and Baldwin's
were prepared to construct capacity based on a new works at Newport
and that Colvilles Ltd.
were prepared to construct capacity based upon an extension to their new Ravenscraig Works.
But they went on to say:
… the Iron and Steel Board informed the Minister that in prevailing circumstances the Government would have to assist in financing the construction of new capacity.
What those "prevailing circumstances" were which, in the opinion of the Iron and Steel Board, made it impossible, without Government financing, to secure the additional capital which was economically justified, was made clear by my right hon. Friend the First Lord of the Treasury when he first announced this decision to the House on 18th November, 1958. Addressing the right hon. Gentleman the Leader of the Opposition, he said:
I am sure that the right hon. Gentleman will realise that so long as the threat, however distant, of nationalisation hangs over it, the industry is precluded from obtaining money in the ordinary market and in the ordinary way"—[OFFICIAL REPORT, 18th November, 1958; Vol. 595, c. 1017.]
Such were the "prevailing circumstances" which brought into effect the conditions of Section 5 of the principal Act in the context of 1958, and such was the justification as at that time for the decision to make these loans. In fact, it has turned out otherwise. It has turned out more fortunately. Up to the end of last year, without taking account of bank loans, or of the very substantial advances made by the Finance Corporation for Industry, no less than £60 million has been raised on the market by the denationalised steel companies by the issue of new shares. All that is new capital, additional to what they had raised by the sale of the underlying original securities.

Mr. Diamond: Can the hon. Gentleman say over what period this fresh capital was introduced?

Mr. Powell: I have no doubt—and this is germane to my argument—that it was towards the latter part of the period that it became increasingly possible for the steel industry to raise these sums on the open market. I am addressing myself to just that circumstance. Only at the beginning of this year we learnt that Stewart and Lloyds, in a single operation, had raised £14 million, and the Chairman of the Steel Company of Wales, referring to the Company's fourth development plan, of which the estimated cost is £33 million, said
the directors are of the opinion that the cost of these further developments could be met from internal sources and temporary borrowing from the banks".
What is more, less than a week ago the Governor of the Bank of England, speaking in Liverpool, used a very remarkable phrase. He said:
The great problem is that there is too much money chasing too few first class shares.
In other words, the savings which are coming forward for investment in the basic industries, coming forward voluntarily for voluntary investment, exceed at present the supply of new shares to channel that investment. The opportunity exists today, as no doubt it did not exist two years ago, for these operations to be financed, directly or indirectly, on the open market.
Thus, circumstances have changed since those to which the Iron and Steel Board referred in their Report. I noticed words which were used by my right hon. Friend—careful, as always, of accuracy in his speech this afternoon, when he spoke of the conditions which obtained "at that time". They no longer exist. There is no longer a real doubt that the steel industry could obtain in the normal manner the finance for its requisite development.
However, we have an agreement which has been made by the Government with the firm of Colvilles, an agreement the the terms of which were announced in January last. That agreement, it is true, provides that actual advances shall be limited to the cost incurred in the development from time to time and that the need shall be reviewed the year after next. But I put this to the Government: I believe it would be right in the changed circumstances to look at this whole matter again now and see whether the agreement cannot be renegotiated, so


as to take account of the very much happier realities of 1960, which have arisen for reasons we all know very well. Only so can we secure that, to the greatest possible extent, the development of the denationalised steel industry will be financed, like the rest of our private enterprise economy, internally by company savings and externally by the voluntary savings of the public.

5.35 p.m.

Mr. Ellis Smith: I hold the view very strongly that we should vote against this Bill. I am confirmed in that view by every speech I have listened to today and by the analysis I have made on the publication of the Money Resolution this morning.
I have had some experience in the past of the tying-up of Money Resolutions to limit the House dealing with questions of finance. It will, therefore, be very interesting, when we discuss the Money Resolution at ten o'clock, to see the approach to the problems raised in this Resolution. The right hon. Gentleman the Minister of Power said in his statement that the financing of the Bill presented a considerable problem. He said they were dependent on the willingness of the Government to provide the finance. The logic of his statement is that this Bill is providing public finance Lo bridge the gap between the public ownership of industry and its denationalisation, and that when this is finally handed over to private enterprise they will have one of the most efficient plants in the world as a result of public financing.
I listened to my right hon. Friend, who made a close and concise analysis of the Bill and the policy that will be applied behind the Bill when it becomes an Act. He said this was capitalism on the dole. If that is so, then he should have carried his statement to the logical conclusion and asked who should own this industry. In the national interest we should put forward an alternative proposal to the one for putting capitalism on the dole.
When I first became a Member of this House in a working-class Opposition the future of this country would have determined whether we should vote against Are Bill. Anyone who approaches our problems from a real Labour point of view is bound to agree that the future of our country demands that this basic,

vital industry should be publicly owned. I propose to produce evidence of the need for that.
The key to the issues involved in the consideration of the Bill was provided for us last week by the Leader of the House. The right hon. Gentleman is modest but politically conscious of the historic rôle which he fills as Leader of the House, representing a minority in the country who for the time being have won the majority vote of the people. I agree with the right hon. Gentleman when he used words to the effect that this House and its proceedings should reflect in the country the struggle for power.
Throughout the world, between the peoples of all countries and the minority of well-placed people, a great struggle is taking place in the mid-twentieth century as to how life should be conducted. It is for these reasons that I accept the phrase used by the Leader of the House that in our proceedings we should speak with candour and at the same time voice the interests and opinions of our people as reflected in the struggle for power.
Power for what? Is it to join the Pelican Club to attend dinners, to get on our hands and knees for crumbs of mere office for a short time, constantly to be putting forward proposals based upon expediency, to make eloquent speeches without a trace of accent, or to put forward constructive ideas in harmony with the world forces which now loom so quickly in the mid-twentieth century?
Therefore, we on this side in particular, and right hon. and hon. Members opposite from their point of view, should be giving effect to the plea made by the Leader of the House and reflecting the ideas of the people to whom we belong in this world movement which is taking place of power for the people or power for the great financial and industrial monopolists and cartels, of which the Bill is concrete evidence.
I stand uncompromisingly for the policy of collectivisation which is being applied in almost every country, including Britain. It is being applied in their way in the United States of America and in India, as well as in China and Russia. In Western Germany—[Interruption.] If we are to have any interjections, let us have them loudly, then we can deal with them.

Viscount Hinchingbrooke: I said that Russia was going the other way. She is decollectivising her society fast.

Mr. Ellis Smith: I know the noble Lord has visited Russia since I have done and, therefore, should be well informed, but some of us also follow the publications to see what is taking place. While the Russians are carrying out a policy of decentralisation to bring about better results, they are still firmly anchored to the policy of collectivisation in the way that they mean to carry it out.
I was about to say that this policy is now being carried out at an increasing speed in our own country. The issue is collectivisation by the monopolists and by the cartels or by the public so that the people can benefit from their own energy used in industry, where they are giving the maximum results. Therefore, the basic issue can be seen in millions of pounds of public money to assist agriculture, to assist shipbuilding, to assist research and to assist to scrap the cotton mills.
Where will this kind of development stop? Where is Britain going? I have great confidence in the future of our country, if only we be worthy of the past. For centuries, this country led the world in the development of industry. To hold our own in the future and to assist our people to get the best results from their human energy which they use daily in industry, we require to work out a modern policy of the kind that I am advocating as an alternative to the policy of scrapping the mills at public expense.
For many years, it was my privilege to work in one of the largest and most efficient industrial establishments in the world. The scientists there were among the foremost and best informed men in the world. They produced the most modern proposals and specifications for bringing out turbines, electric traction, atomic power and engines of all kinds. The later development was carried out by some of the world's greatest engineers.
We do this on a great scale, but it all requires colossal financial resources, which can be provided only by the collective resources of our people. That is the basic explanation of the Bill, whether it is done in this niggling way to develop financial and industrial cartels

and monopolies or by the use of the nation's resources for the benefit of the nation and of the people.
Steel is collectively produced. When the Bill is passed, it will be collectively financed. Therefore, the steel profits should be collectively received by the people for the benefit of the nation. Upon that, I understand, the party on this side is completely united.

Mr. Nabarro: It is not, you know.

Mr. Ellis Smith: If there is any doubt about that, we will see. In my view, we are completely united.

Mr. William Ross: All the disunity is on the Government side.

Mr. Ellis Smith: If anyone doubts what I am saying—

Mr. Nabarro: Clause 4.

Mr. Ellis Smith: I hope the hon. Member for Kidderminster (Mr. Nabarro) will listen. If anyone doubts what I have just said, speaking for myself I welcome the statement made last weekend by my right hon. Friend the Leader of the Opposition when he said that we stand for the national ownership of the steel industry. Instead of retreating or vacillating, like so many have done, we ought to accept the Challenge of right hon. and hon. Members opposite. The challenge is whether the nation is to be run for the benefit of a well-placed small minority or for the benefit of the people and of the future of the country.
Is public finance to be used as proposed in the Bill, or is it to be used for the benefit of the nation and the people? For technical reasons, we owe this money to those engaged in science, in technology, and in engineering development. They need colossal financial resources. The Bill and the Minister's statement are concrete evidence of the line that I am taking. We owe it to those engaged in the export industry to finance them collectively to enable them to get the best results from the great work they are doing.
That is partly the reason why I became so indignant last Friday. Millions of pounds are to be spent on scrapping the cotton industry, financing the new Cunardens and assisting the aircraft industry, but the sick, about whom we


have talked for 2,000 years, the disabled and the unemployed are now treated worse in this country than in any other country in the industrial world.

Mr. Nabarro: The hon. Gentleman has spoilt it now.

Mr. Ellis Smith: I do not object to an intervention of that kind.

Mr. Nabarro: The hon. Gentleman was carrying a lot of us with him in his very apposite comments on State paternalism, but now he has ruined it all by extolling poverty which no longer exists.

Mr. Ellis Smith: I have no objection to interventions by the noble Lord and the hon. Member for Kidderminster. I have learned from experience that men and women who express their disagreements to the person from whom they differ are people with whom one can get on. One can trust them and do business with them. The people whom one cannot trust and rely on are those who are polite to the person speaking but tell a different tale when they get through the door of the Chamber. I agree with the previous occupant of the Chair who, time and time again, pleaded for cut and thrust in debate. Only in that way will the House become dynamic and fulfil its real object and enable us to deal with problems in the way that we are doing.
I am pleased that I carried the hon. Member for Kidderminster with me for a certain way, but I am sure that he would not expect me to agree with him or to carry him with me much further. I speak for those amongst whom I was born, amongst whom I live, and with whom I worked all my life—the working-class people. It is on their behalf that I am speaking now, just as the noble Lord will speak for the landlords, his Cromwellian ancestors, and those whom he addresses during banquets in another part of the House—the Freedom League or whatever it is.
I am not asking the noble Lord to accept what I say about the treatment of our sick and unemployed people. I am asking him to make a study of the official figures and to analyse the Report of the International Labour Office in Geneva, a copy of which is in the Library. Such a study will show that we are treating our sick, unemployed and disabled worse than they are treated

in any other country in the world. That is why I became so indignant last Friday. In twenty-five years in the House, I have never before seen work of that kind carried out in the ruthless manner in which it was done to prevent the House considering one of the most urgent needs of the people of our country.
Some of my hon. Friends—there are not many, but those whom I greatly respect—have said to me, "Ellis, why do you bother about finance?" I propose later to put some searching questions to the Minister about the finance dealt with in the Bill. I take an interest in finance because the time has arrived to bring about a restoration of Parliamentary control over finance. The time has arrived for this House to carry out its historical function of scrutinising expenditure for proposals of this kind, and scrutinising the Estimates. All these questions are raised in the Bill, and I shall proceed to answer them.
Our constitutional rights, in the main, are based on the control of finance by the elected House of Commons. How can we control finance if we do not scrutinise expenditure? How can we control finance if we are satisfied with the eloquent speeches made by shadows of the shadows of Permanent Secretaries and fail to scrutinise colossal expenditure in this country? No one is a greater admirer of our Civil Service. I will work day and night for a Minister who means business and who can say "Yes" or "No", but I will not forget the other five who meet their friend Lord Plowden at lunch every so often and discuss what should be done.
I am concerned about finance because, while the Government will provide the money, private contractors will determine the policy. Millions of pounds are to be spent. Where do the millions of pounds come from? They come from the manufacturing industries. During the past ten Nears colossal overhead charges have been imposed on the manufacturing and productive industries. That has made me smart to such an extent that it is like rubbing salt into an open wound.
Between 1928 and 1934 I had to accept responsibility for agreeing reductions in piecework prices and reductions in productive expenditure. We have now reached the stage when we can live


only by exports. In future we will maintain our exports only if our prices are competitive, our quality good, and our delivery dates reasonable. Unlike the Parliamentary Secretary to the Ministry of Power, those of us who have been engaged in working in competitive industries have obtained our livelihood only by having competitive prices and holding our own in world markets.
Section 5 of the 1953 Act authorises the Minister of Power to make payments from money provided by Parliament. Did the Minister give that authorisation? I should like to know which Minister conducted these negotiations and gave this authorisation.
I have here the report of a statement made by the chairman of Richard Thomas and Baldwin's Ltd., printed in the Observer of 14th February of this year, which says:
The Ministry of Power agreed to loan us up to a maximum of £60 million. …
Later on it says:
The Ministry of Power has agreed to increase its loan to the Company to a maximum of £70 million …
Should that statement have been made in public, before the House of Commons was informed about it? Should it not have been made in this House, by the responsible Minister?

Mr. Nabarro: It was made. Has the hon. Member forgotten the statement made by the Minister in the House at the beginning of 1959, concerning Colvilles and Richard Thomas and Baldwin's? Surely the hon. Member is extremely inaccurate?

Mr. Ellis Smith: I am referring to a statement made this month by the chairman of the company to which I have referred.
Who was the responsible Minister when these negotiations were being carried out? Was he a non-elected Member of another place? If so, should such a Member be allowed to negotiate matters involving finance? How can this House safeguard its historic constitutional rights if it is not able to control finance, and if it allows a non-elected Member of another place to give financial authorisation?

Mr. Maudling: The Minister concerned was a Member of another place,

but I was his spokesman in this House and it was open to any hon. Member at that time to put down a Question to me on the subject.

Mr. Ellis Smith: I thank the right hon. Gentleman for that reply. It is the kind of reply that I would expect from him, with his record. We now have it admitted that the Minister was a non-elected Member of another place. I should like Mr. Speaker to consider this situation. I do not wish to have an answer now, but I want it placed on the record. In view of the fact that the constitutional rights of this elected House involve the control of finance, should a non-elected Member of another place be made responsible for negotiations with regard to the allocation of finance to the extent of millions of pounds?
This means that the Consolidated Fund is being used increasingly as a sinking fund, allowing millions of pounds to be spent and lent, or hidden from Parliamentary control. It is undermining a former Speaker's stand in support of the five Members, which brought about our constitutional rights.
I wish that the authorities of this House and hon. Members who are public-spirited enough to approach problems other than from a narrow angle would realise that we must safeguard our constitutional rights against the steel barons who financed the campaign to defeat democracy in the last General Election, and against Members of another place who are handling financial matters when they have no constitutional right to do so.
Is not this Bill taking unfair advantage of the provisions of Standing Order No. 80? How can we control finance and carry out our duties properly if a non-elected Minister is allowed to carry out these negotiations, and the chairman of a private company is able to inform the Press that neither he nor the Minister, but a person in the Ministry, has conducted the negotiations?
It is for this and many other reasons that I have put these probing questions, and I hope that the Minister can answer them.

6.5 p.m.

Viscount Hinchingbrooke: I am much more interested in practical matters, such as the extent of


State patronage, than in matters of ideology and nomenclature. I have noticed that the minds of the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) and myself have been drawing together in the last few months on the question whether the Government are entitled to put the money of the taxpayers in investments in private enterprise concerns and nationalised industries.
I hope that I am not an ideologue. I do not share the view of most hon. Members opposite—and there may be a few left on this side of the House—that the fact of nationalisation is all that really matters to the community. I am not in favour of denationalising the Post Office or the Central Electricity Generating Board or British European Airways, although I should like to see some of them subjected to probing competition. Nor are hon. Members opposite fascinated by the idea of nationalising Rolls Royce, I.C.I. or any other great private enterprise concern. When we listen to the theological arguments of the hon. Member for Ogmore (Mr. Padley) and, still more, the right hon. Member for Midlesbrough, East (Mr. Marquand) we are forced to conclude that they are isolated members of the Labour Party—members of one of those small groups of theologians who are now trying to make the Labour Party dance on the point of a pin—

Notice taken that 40 Members were not present;

House counted, and, 40 Members being present—

Viscount Hinchingbrooke: Before I was interrupted I was saying that I hoped I was not an ideologue about nationalisation. I feel that after three General Elections on the subject the country is completely bored with the whole matter and does not want it pursued as an ideology and a final political purpose, one way or the other.
I am, however, as I think the House knows by now—from interventions I made during the discussions on the Local Employment Bill, and on other occasions—opposed to using taxpayers' money for investment in public and private industry, particularly where the industry is used as a sort of adjunct of the Welfare State. I believe that local

authorities and Government Departments are quite sufficient agencies in themselves to establish social justice, and I cannot understand why we should, in the iron and steel industry, in the coal industry, in the railways and in other ways, through subsidisation, by employing taxpayers' money, seek to enlarge the area where the State operates.
Equally menacing, I think, is social dirigisme by the Government inside industry. In this country we live by efficiency and by keeping the economy competitive. The uneconomic siting of plants such as we now have, or shall have, in relation to the proposal that Colvilles shall go to Lanarkshire, the subsidisation of industry for welfare or prestige production, drawings on Government finance for the provision of social capital or to pay danegeld to the uncontrollable aspirations of the trade unions—all these things seem to me to lead to the Nemesis of society, to cause constant inflation and to weaken the currency.
I shall constantly examine all these Government Measures as they are introduced, in Bill form or as Statutory Rules and Orders, on the basis of whether they extend the general patronage of the State to private and public industry or whether they are over-liberal in their social effects, and whether all this is being done at the cost of a secular inflation over the years.
What I am certain this country does not want to see again is the sort of violent rise in prices which occurred after the 1955 Election in consequence of the economy having been dressed up for that Election—I have said this before in this House and I say it again—which was followed by widespread defections from the Conservative Party in 1956 and 1957. Mercifully those who defected were brought back to the fold by the wise and courageous policies of my right hon. Friend the Member for Monmouth (Mr. Thorneycroft). I am prepared to fight to the end to stop a recurrence of this, a return to the policy of driving inflation which caused so much anxiety to people in all walks of life in this country.
This is a technical Bill. It takes the operation of these loans, as promised to Richard Thomas and Baldwin's and to Colvilles, off the Estimates and puts


them as a sum below the line. There is very little in that. As was said by my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) it is probably a proper accounting procedure, and this Bill ought, therefore, to be allowed. But people will make a mistake if they think that the taxpayers' money is removed from the scene wholly by this operation. It is not so. In so far as there is a surplus above the line—and there was a very large surplus in relation to the expenditure below the line last year and a rather less surplus this year—obviously the taxpayer's money is involved, in part, in financing some of the money for those investments. Although it is a mere accounting device to transfer it from one place to the other, ultimately not only in interest payments for the service of this loan but also in the payments below the line in so far as they are covered by the surplus above the line the taxpayer has to find the money for these investments.
I mentioned Colvilles with its £50 million, a private company operating in Lanarkshire. That connects with my opposition to the Local Employment Bill. I do hot believe it right and proper for the Government to pour public money into enterprises, either by this sort of operation or by means of the local employment legislation, to establish industries in uneconomic parts of the country. I hope that this loan to Colvilles will be renegotiated, which, as was said by my hon. Friend the Member for Wolverhampton, South-West, might be possible, in order to relieve the taxpayer of the pledge which has been given. But the company may refuse to have the loan renegotiated precisely on the grounds that it has agreed to go to Lanarkshire to fulfil a social purpose.

Mr. Ross: The noble Lord talks about Colvilles going to Lanarkshire, but the company has been there for a long time.

Viscount Hinchingbrooke: I know that the company has been there for a long time, but, so far as I understand it, this loan is to enable it to expand its plant in Lanarkshire, whereas we have been told in this debate that the really economic project would be to put the whole of this investment into South Wales. So Colvilles may very well argue that it will not have the loan renegotiated

because it carries out a social purpose of the State in putting capital into Lanarkshire to help to remedy the unemployment situation in that part of the United Kingdom. More is the pity, because if there had not been this social purpose attached to the loan it would have been more easily possible to redeem it.
Before the war things were done differently from today. I remember Lord Baldwin speaking in this House about a great loan to Stewarts and Lloyds to enable that firm to go to Corby. That was an entirely economic proposition. The Government put, I think it was, £10 million or £20 million into Stewarts and Lloyds in order to establish the enormous stripmill and blast furnace at Corby. That was economic because it was done right on top of a seam of iron ore. Thousands of Scottish working people were moved down from Glasgow and rehoused at Corby, and one need only go to that spot to see what a thriving town it is, and how healthy and contented are the Scottish workers who reside there, in a part of the country quite different from the place of their birth. There was an industry which needed a loan and which has probably now repaid it, and could have done so many times over from its profits. That is the sort of enterprise into which the Government should go if they are to give loans to industry, and not use them only for effecting these ultra-social purposes.

Mr. George Lawson: Is the noble Lord aware that Colvilles' shares within a short period have been making 83s. each and that the shares originally cost 26s.? That does not suggest an uneconomic area.

Viscount Hinchingbrooke: No, and I am told that Colvilles did not want to take State money to make an investment in that part of the world, but the firm was flattered and induced into doing so by the Government. That is what I object to in this whole operation. I do not think it part of the duty of the State to go to a great private enterprise firm and say, "We shall pay you the taxpayers' money to do what you do not want to do."
We have been told that one of the reasons why these loans are given is to overcome the situation in which these


industries, threatened with nationalisation, cannot go to the market. Surely it ought to be the duty of a Conservative Government, after nine years of power, to engender a more hopeful situation in industry than that. Think of the psychological jam that my right hon. and hon. Friends are in when they have to grant money to get industries going because they fear that ultimately those industries will have to be nationalised. That is the danger of this modern radical Toryism we are now getting from the Government after nine years.

Mr. Roderic Bowen: Not radical.

Viscount Hinchingbrooke: Radical Toryism we understand it to be. That is the danger, that they are forced to do things which will call upon them the Nemesis of State control and nationalisation, and in the end they will be at the mercy of the philosophy they are supposed to be fighting in the country. I am sure the country is getting heartily sick and tired of this situation.
Much the same argument applies to the loan to Richard Thomas and Baldwin's. The loan was raised from £50 million to £70 million. Why did the firm change its point of view? It was going in for an ingot ton production of 1 million. The £50 million was conditionally promised and up went the proposal to 1·4 million ingot tons, costing another £20 million of the taxpayers' money. That is the kind of thing we get in an industry when it is accepting State patronage. It is given an inch and it takes an ell. It demands more and more from the State to satisfy its own personal requirements and to aggrandise itself. The country is heartily sick of this whole policy—

Mr. Nabarro: I know I am.

Viscount Hinchingbrooke: I want to know when the process is to stop, when the nationalised industries and heavily patronised firms are to be got rid of, when the albatross of my right hon. Friend the Member for Monmouth is to be taken from around the mariner's neck, when Sinbad is to have the Old Man of the Sea shrugged off his shoulders by a Government which hold true to the original purpose of their election.
We have had nine years of what an hon. Member opposite called "bastard Socialism". We have had nine years of "Mr. Butskell" and that is nine years too many.

Mr. Richard Marsh: rose—

Viscount Hinchingbrooke: No, I cannot give way again; I have nearly finished. I have a feeling that when he looks at the developing inflationary situation with costs and prices just about to go up, with irrational wage demands pouring in and so far being satisfied by the Government without any sign of resistance, the political historian may ask on what playing fields the General Election was won—were they this time the playing fields of Winchester and was the price paid for victory too high? Are the policy and purpose of the Government conceived too much inside the battle lines of the Labour Party? Is it not time that they should learn a new philosophy, something which satisfies the basic instincts and aspirations of the British people?

6.25 p.m.

Mr. J. Grimond: I cannot help thinking that successive Conservative Governments must sometimes feel that the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) is a little like Sinbad in the way in which year after year he has clung round their necks—in good causes very often—with a refreshing and genuine independence. He has been at it again today.
I hold the view that the object of this Bill, in the mind of the Government, was a good object, but whether the methods used are the right methods is, I think, extremely doubtful. There have been varied criticisms of the methods from this side of the House, but I am bound to say that I think many of them are vitiated by the underlying assumption that private industry and profits are wicked. Of course, if one is a collectivist, one must think that and must think that Colvilles and all the other firms ought to be nationalised, but I understand that the Labour Party does not think that as a party. On the contrary, its proposal was to buy itself into private enterprise, take a share of the profits, but leave control and most of


the profits to private enterprise—to cash in on the general success of private industry.
If that is so, we should try to make private enterprise work better. My general question about the Bill is, are we doing that or not? I think the hon. Member for Wolverhampton, South-West (Mr. Powell) put his thumb firmly on a contradiction in the Bill. It is introduced in connection with the Iron and Steel Act, 1953, which, as the hon. Member said, was wholly concerned with producing an efficient steel industry but, as we know, part of the reason for putting these mills in Wales and Scotland was a social one, which could not be justified under the Act. The Minister, very wisely, did not today refer to that, but there is this underlying contradiction in Government thinking about the Act and what they propose to do.
The Minister had a twinge of conscience. He wanted it on record that the House had not objected strongly when these sums had first been talked about, but, as was rightly said by an hon. Member, we have not had an opportunity of objecting at any length, although some of us have been objecting for some time to the Government's methods over the location and control of industry.
What I think is particularly open to objection is when the Government begin to give subventions to a particular firm. It is one thing to give help to an industry, but when the Government give help to particular firms that seems open to all sorts of objections. If The Times has totted up the figures correctly, the Government have already been engaged over the last eighteen months in lending or giving £250 million to firms. I should not say this is "bastard Socialism", but I should say that it is right out of the Labour Party manifesto.
One objection is that it puts one firm at a disadvantage against another. One of the reasons for having a free market and free enterprise system is that there should be free competition. Once we have a cat's cradle of different subsidies for different firms, that disappears. Secondly, as the noble Lord suggested, it is taking the top off the pork barrel. There is every opportunity for patronage and that is something about which this House has always been very jealous. The Government give enormous television

contracts to groups of people who do not have to bid against one another and the Government are now to give large sums to the aircraft industry and to many individual firms in other industries. I do not say that anything objectionable has been done, but it is opening the way to all sorts of back stairs influences. In this House already we have a great deal of political pressure brought on Ministers because we all have to represent our constituents if they are to get a share of the Government's aid.

Mr. Maudling: I wonder if the hon. Member could make one point clear? I gathered that he was saying that it was wrong to give Government help to individual firms as part of the location of industry policy. That was the purpose of the Local Employment Bill, which was passed without protest by his party.

Mr. Grimond: I agree that we did not vote against the Bill, but I think these methods need a long, cool look taken at them. In some cases there may be firms which we want to get into certain places, and cannot get them there otherwise than by assistance from public funds, but I doubt whether that applies in the particular cases we are discussing.
It seems to me that everybody is becoming so terrified of being called a doctrinaire, or an ideologue, to use the noble Lord's term, that chaos may easily result. I hope that I am not an ideologue. It seems to me, however, that some principles ought to be laid down on which we can support particular industries from public funds. First, there are welfare reasons, arising because there is a sudden recession in an industry which is concentrated in a town, such as Dundee, or an area, such as Lancashire. I agree that steps must be taken to relieve distress in such an area. Next, there may be a valid reason when there is some job to be done which private enterprise is not doing. Research backed by the Government is eminently defensible, even though most of its results go to private enterprise. Defence is another instance, as is the spreading of industry into areas of high unemployment, which is the purpose of the Local Employment Bill. But the last reason has not been given as a reason for this Measure, although undoubtedly it entered into the Government's thinking.
I think that it is valid to consider whether this is the right way of getting Colvilles to put a stripmill into this area. I will not mention Richard Thomas and Baldwin's because the case of that firm is different; it is a nationalised industry which must come to the Government for its money.
The main reason which has been advanced for providing this money is that because of the machinations of the Labour Party before the General Election, this wretched company could not get any money from the public. This seems to me to be the thin end of the wedge. The next thing we shall be told is that the machine-tool industry cannot get any money because the Leader of the Opposition has said that it may be nationalised. It will then be said that there is a case for giving it support. Secondly, I seem to remember—and I am open to correction—that in point of fact the steel companies did raise money on the market in the years before the election. Lastly, as was again said by the hon. Member for Wolverhampton. South-West, at any rate the position has greatly changed.
I should like to ask whether we are absolutely committed to provide this money in this way. The Bill is not yet an Act of Parliament. Under Clause 1 (2) very stringent conditions are laid down that the Treasury must approve of any sums and arrangements entered into under it. Now that steel shares are booming, is there any hope that if Colvilles want the money, the firm could go to the market for it and raise it by a public issue as, if possible, it should?
On the general question of how we are to deal with the admitted difficulties of getting business to go to areas of high unemployment, I suggest to the Government that the most satisfactory thing we can do is to try to improve the underlying situation. Industries will not go to South Wales, for example, partly because the atmosphere of depression is still to be found in some areas, and there is bad transport and bad housing. These are matters upon which the Government can certainly concentrate with great effect.
Moreover, if we want to give help to an industry, should we not see what can be done through taxation? It is rumoured that the Government are considering giving the Cunard Company

assistance to build new liners. One of the reasons that shipping companies are in difficulty about replacing their ships is that they are allowed to write down their assets only at historical cost, while the taxation system weighs heavily on their reserves. Is it sensible first to put a company into a position in which it is taxed so heavily that it cannot build up its reserves and then to offer it a subsidy to get it out of the difficulty?

Mr. Nabarro: The hon. Member is being quite fair about shipping, especially in the context of the "Queens", but is there not a 40 per cent. investment allowance available to shipping which much more than covers the gap of which he is speaking?

Mr. Grimond: There is now, but, as the hon. Member knows, these allowances go up and down in every Budget. Furthermore, there are other forms of taxation and, if we want to help industry, we could at least consider whether we should not say—there are strong objections to it, I know, particularly from the Treasury—"If you will conform to certain requirements which the Government may impose, and go to certain districts, then you will be taxed at a lesser rate." Let us try some areas of low taxation.
If the Government are to provide this money to Colvilles, should they not take some equity interest? I can see that this is a difficult matter for the Tory Party, because they would then be stealing the Labour Party's clothes in a big way—coat, waistcoat, trousers and everything. But if they do not do that, and if they are set on providing this money, they may put the taxpayer at a considerable disadvantage if inflation continues, which is not unlikely. Again what control will the Government have of Colvilles, if any? They cannot yet tell us even the rate of interest. We do not know whether there is any undertaking—I imagine there is—about how the money will be used, in detail.
Personally, I do not think that it is desirable for the Government to buy themselves into the equity of industries. Either the Government become a sleeping partner, as has happened in British Petroleum, when they have been merely an absentee owner; or else they attempt to take part in management, which is doing a job which they are not set up to


do. Moreover, they have no machinery for doing it. This is the dilemma we face if we adopt this method of helping industry.
I am bound to say that if this is to become a common practice—and it seems to be becoming a common practice—the Government must consider very much more closely than they have done so far the principles on which they are acting. I asked the Chancellor about this and was given an answer so vague as to be virtually meaningless. They must consider what principles are held to determine the right of an industry to go to the Government for direct support from the taxpayer.
If they establish those principles, then to my mind, if they intend to go on with this method at all, they should give very careful consideration to the conditions upon which this money is lent. I do not believe that the Government of this country should get into the general business of being bankers. Nor do I think that they should get into the general business of managing companies. It is for the House to examine very closely, and to demand a good deal more information than we have been given so far about, the terms and conditions upon which, the Government, with good motives, begin giving out money to particular firms and not merely to assist districts or industries as a whole.

Mr. Speaker: Mr. Nabarro.

Mr. Diamond: Before the hon. Member for Orkney and Shetland (Mr. Grimond) sits down—

Mr. Speaker: I called the hon. Member for Kidderminster, but if he does not mind restraining his enthusiasm for a moment it might be possible, if the hon. Member for Orkney and Shetland (Mr. Grimond) wishes to deal with it, to permit the intervention.

Mr. Diamond: I am most grateful to you, Mr. Speaker, and to the hon. Member for Kidderminster (Mr. Nabarro). I wished to ask the hon. Member for Orkney and Shetland, before he sat down, whether he could comment on the Government investment in British Petroleum. He has referred to the unsatisfactory nature of the control by the Government and the House, as he sees it, but would he say whether the

public purse has been suitably remunerated as a result of its investment in that company?

Mr. Grimond: The public purse has done quite well out of the British Petroleum Company because it has paid a very high dividend, but I feel that such investment by the Government might lead into difficulties in the future. I am bound to say that since the original reasons for this investment have long since disappeared, I see no reason why the Government should not sell that investment and so add more shares to the market of the type which the Governor of the Bank thinks are so necessary. Together with Richard Thomas and Baldwin's, this is another source from which to meet the Governor's desire for more shares to sop up the money which he says is available for investment.

Mr. Speaker: Mr. Nabarro. I am grateful to the hon. Member for helping me to allow the intervention.

6.39 p.m.

Mr. Gerald Nabarro: The reader of the OFFICIAL REPORT tomorrow might discern a somewhat paradoxical position in our debates today. Opposition Members, led by the right hon. Member for Middlesbrough, East (Mr. Marquand) have damned the Bill with faint praise. Three speakers on the back benches on the Government side of the House have in their turn been highly highly critical of the proposals in the Bill. Those three speakers, commencing with my hon. Friend the Member for Yeovil (Mr. Peyton), said bluntly, "I do not like this Bill." My hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) presented, as is customary with him, a reasoned and logical case for opposition to the Bill. My noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) continued with a hostile and philosophical reflection upon the Measure, which carried forward carefully his many and valuable contributions to the debates on the Local Employment Bill.
I do not like this Bill. I cannot bring myself to vote against the Second Reading for reasons which I shall explain in the course of my speech. I should like to tell my right hon. Friend the President of the Board of Trade that I must reserve my position on Committee stage and I


feel that there will be many of my hon. Friends who are with me in seeking to amend the Bill in certain important respects, not because we seek in any way to circumscribe the growth and annual increase in production of the steel industry but rather because we are afraid of the great extent of State intervention and investment in enterprises which should be wholly conducted within the private sector.
Let me, before I pass to the main arguments of my speech, comment for a moment on what the right hon. Member for Middlesbrough, East said concerning the investors in the already denationalised sector of the steel industry. I wrote down his words. He referred to them disparagingly and in derogatory fashion as "operators and speculators". His hon. Friend the Member for Ogmore (Mr. Padley) was a great deal more intemperate. What are the facts?
There is no major privately owned industry in this country today where the ownership of the shares is so widely diversified as in the denationalised sector of the steel industry. I took the trouble before this debate—because this is a financial Bill and one directly or indirectly concerned with investment—to analyse the ownership of the hundreds of millions of pounds worth of shares in the denationalised sector of the steel industry. Here are the facts. Those persons owning less than 100 shares represent 38 per cent., approximately, of the shareholders. Those persons owning between 101 and 500 shares represent 50 per cent. of the shareholders, which means that 88 per cent. of the shareholders are represented by persons owning less than 500 shares. Assuming that they were bought in the last two years and having regard to the average stock value, that would represent an average investment of about £1,000 apiece. They are small investors. Those owning between 501 and 1,000 shares represent 7½ per cent., those owning between 1,000 and 10,000 represent 4 per cent. and those owning over 10,000 only ·5 per cent., or one half of 1 per cent.
I hope that the right hon. Gentleman will not leave his place for one moment because I am anxious to deal with the remarks that these shares are owned by "operators and speculators". Who are

the large investors? It is instructive to know that the Co-operative Insurance Society is a very large holder of shares, and even more instructive to note that such confidence in the denationalised steel industry has the National Union of Mineworkers that their own pension fund, the Mineworkers' Pension Scheme, and the National Insurance Industrial Injuries Colliery Workers' Supplementary' Scheme owned in 1958 no fewer than 700,000 preference and ordinary shares in the denationalised iron and steel companies.
Does the right hon. Gentleman believe that his colleagues in the National Union of Mineworkers are "operators and speculators" in the vicious way in which he disparaged these investors this afternoon? He is on dangerous ground. He may have his candidature blocked in Middlesbrough at the next election by the National Union of Mineworkers. He is also anti-ecclesiastical in his approach to these matters, because the Church Commissioners held in 1958 no fewer than 1,148,000 shares in the denationalised steel companies.

Mr. Jack Jones: rose—

Mr. Nabarro: The hon. Member for Rotherham (Mr. Jack Jones) should hold his peace for one moment. Who are all these powerful bodies, trade unions, Church Commissioners and co-operatives but hundreds and thousands of small investors, and the more so today than in 1958. The right hon. Gentleman should also know this through the growth of the unit trust movement. They are the investors in the steel companies whom the right hon. Gentleman has the impudence to refer as "operators and speculators."

Mr. Jack Jones: Would the hon. Gentleman, whose discourse I have followed with great interest, when referring to all these millions of shareholders tell me of one who has any controlling shareholding in the industry?

Mr. Nabarro: Of course they have not. Diversification of share ownership is the first principle of Conservative policy. We want ownership in industry to be as widely spread as possible and so does the Leader of the Liberal Party the hon. Member for Orkney and Shetland (Mr. Grimond). I am glad to see that he is nodding assent, except that he says


this should be done by co-ownership methods with statutory force. I differ from him in that respect, but our objectives are the same. It is not desirable that any single body should have a majority ownership in a huge undertaking or series of undertakings of this kind. Conservative policy says that there should be the widest possible diversification of ownership which we are seeming to achieve in this industry today.
Having answered the right hon. Gentleman's point and, as I hope, sunk it without trace, may I pass to some of my apprehensions in regard to this Bill and those of my hon. Friends, three of whom preceded me? I am gravely anxious about the growth of what I called this evening State paternalism, the continuously increasing investment of State funds in private undertakings, whether it is in aircraft companies, and steel or nationalised coal and transport, and also those undertakings coerced—I wished to interpolate that word in the speech of my noble Friend the Member for Dorset, South—to areas of insecure employment or above the average of unemployment by Government grants. This increase of State paternalism is evident every few days in this House and I believe it to be grossly inimical to Tory beliefs and objectives. It is that to which I object so largely in this Bill.
No one has yet brought out what is the State's stake in steel before this Bill and after this Bill in the aggregation of the sums invested. That is a point to which I wish to address myself because it seems to me to be of critical importance. In 1951, when the Conservative Party won the General Election of that year by a narrow margin, the amount of steel stock which had been issued by way of compensation for steel assets by the previous Socialist Government was worth £251 million at face value. My right hon. Friend the President of the Board of Trade need not trouble to check my figure. I rang the Treasury this morning to have it confirmed. But what is it today? The figure today comprises £92 million in respect of non-denationalised steel companies which are still subsidiaries of I.S.H.R.A. and £147·8 million invested by I.S.H.R.A. in already denationalised steel companies. Those hon. Members

who are good at mental arithmetic will discern that the addition of £92 million and £147·8 million gives the State a stake in steel of £239·8 million at 1st January last. On 26th January, 1960, the Chancellor of the Exchequer confirmed those figures for me, as hon. Members will see from a perusal of columns 25 and 26 of the OFFICIAL REPORT of that date.
The State's stake in steel at 1st January, 1960, was £239·8 million, but added to that is a further proposed State investment now of £120 million, making the total State investment in steel, if the Bill goes through unamended, up to approximately £360 million, or £110 million larger than at the date when we commenced denationalisation of steel eight years ago. That is the antithesis and negation of denationalisation. It is proceeding in exactly the opposite direction. That is what I object to so greatly, under the guise of State paternalism.
The Conservative Party believes that there should be a progressive reduction in the area of public ownership. We are not doing that with steel. We are nationalising more and more, as fast as we can go, but dressing it up in different guises This time with the Bill now before the House we are being asked to vote £120 million from the Consolidated Fund. The hybrid organisation called the Iron and Steel Holding and Realisation Agency has already invested £147·8 million in these denationalised companies.
I think it is pertinent for me to ask my right hon. Friend the President of the Board of Trade a number of questions. The Miniser of Power has said already that it is the purpose of the Conservative Party to secure the complete denationalisation of steel. Steel will not be denationalised until I.S.H.R.A. is terminated, wound up, and all its investments sold on the stock market to private investors. I am glad to see my right hon. Friend the President of the Board of Trade nodding assent. I know that I am on firm ground because I am enunciating pure Tory philosophy if he nods his head. I want to ask him several quesions. When will I.S.H.R.A. be terminated?

Mr. Maryland: Never.

Mr. Nabarro: It is with interest that I hear the right hon. Member for Middlesbrough, East say "Never".

Mr. Marquand: Perhaps I should say that it will not be until after the next General Election.

Mr. Nabarro: That will be four or five years hence, and in any case the result is a very questionable matter.
My first question to my right hon. Friend is to ask when I.S.H.R.A. will be wound up. I hope that he will not fob me off with an inconclusive and disingenuous reply tonight that I.S.H.R.A. will be wound up when it has disposed of its subsidiaries and its investments. That would be a highly unsatisfactory reply. I want a firm assurance that the Tory Party will honour its election pledges made in 1951 and repeated in 1955—and we won the General Election on it in 1959—that we intend to denationalise steel completely. I want a term put on the process. I shall harry the Treasury bench until that desirable objective has been reached, until total denationalisation has been achieved. Will my right hon. Friend answer that question first tonight?
The second question I want him to answer is of equal importance. We have heard it put forward in various forms from previous speakers on this side, but that does not make it any the less important or valid now that I am putting it. Now that the Conservative Party has won the General Election, now that we sit in the House with a majority of 100, now that we know that with reasonable good fortune and save for any calamity we are here for four and a half years more, what is the objection to Colvilles and Richard Thomas and Baldwin's, which under the Bill may receive £120 million from the Consolidated Fund over the next five years, going to the proper source for their capital moneys, namely, the stock market? The answer is that there is no objection to it. The answer, indeed, was given by Mr. Cameron Cobbold. My hon. Friend the Member for Wolverhampton, South-West, who shares a political philosophy so closely identified with my own, fastened on that admirable speech made by Mr. Cameron Cobbold in Liverpool the week before last. I shall not quote his exact words, but the

general reference was to a large volume of potentially available capital awaiting investment in first class equities, in other words a shortage of first class equities.
Is it really suggested by my right hon. Friend the President of the Board of Trade that Messrs. Richard Thomas and Baldwin's would be anything less than a blue chip? My right hon. Friend is muttering. Does he agree with me? I am sorry that I cannot cause him to answer now. Does he suggest that Colvilles'£50 million placed on the stock market would be anything less than a blue chip? I am sure that it would be a blue chip. I would buy either of these shares, and I only buy blue chips.

Mr. Cronin: There is a chip on the hon. Gentleman's shoulder.

Mr. Nabarro: That may be so, but it is a very profitable chip. I do not dispute it—especially with steel shares.
My hon. Friend the Member for Wolverhampton, South-West was exactly right when he made the point that those steel shares have risen by approximately two and a half times on an average in stock market prices over the last two to two and a half years. That gives the opportunity for those companies to secure further capital moneys on the Stock Exchange on more favourable terms than would otherwise he the case.
If one looks in the Financial Times, one will see that the yield of the Steel Company of Wales, for example, is less than 4 per cent. That is probably cheaper than the rate of interest at which Richard Thomas and Baldwin's will be able to borrow money from the Government. I thoroughly dislike this admixture of State investment alongside private investment. It should be pure, one way or the other. If it is the Socialists in office, it will be State investment. If it is the Tories in office, it should be private investment.
Let the President of the Board of Trade address himself to this problem as well. If he disagrees with me that an issue of Richard Thomas and Baldwin's shares or Colvilles' shares on the stock market are blue chips, why does he not seek an alternative method of investment? All of us on this side have always supported the Finance Corporation for Industry. Why should not


Richard Thomas and Baldwin's and Colvilles obtain their money from that Corporation? Who finances the Finance Corporation for Industry? The joint stock banks do. It is not financed from the Consolidated Fund or from taxpayers' money. It would not need a Bill in the House. Why cannot Colvilles and Richard Thomas and Baldwin's go either to the stock market and seek public subscription there for the £120 million over the next five years, because Richard Thomas and Baldwin's will be denationalised quite soon, or to the Finance Corporation for Industry? [Interruption.] Hon. Members obviously do not read the financial and other well-informed Press. That concern will be denationalised quite soon.
Why should the taxpayers put up the money? In Committee I shall find means of circumventing my right hon. Friend's nefarious intentions. In the Bill, the sum is £120 million. There will not be any difficulty in moving to reduce that amount. There will not be any difficulty, pari passu—and I hope that my right hon. Friend will not this time arise to correct my Latin pronunciation—

Mr. Maudling: My hon. Friend had it right this time.

Mr. Nabarro: My right hon. Friend has a long memory. It is six years since he made that correction.

Viscount Hinchingbrooke: rose—

Mr. Nabarro: My noble Friend intervened to say that my pronunciation was right in the first instance—"Floreat Etona".

Viscount Hinchingbrooke: No, I intervened to say that no one knows how Latin was pronounced.

Mr. Nabarro: I am being led from the path of purity in the matter of steel.
I believe that my hon. Friends and I should seek to amend the Bill in Committee in two important regards, and they are the two objections to the Bill. First, we should seek to reduce the £120 million and, pari passu with that, we should seek to reduce the term of years referred to; 1965 is written into the Bill. Then, in case my right hon. Friend—I know his impeccable approach to these matters—says that would stultify the expansion

plans of the two companies, let me add this.
I would not deny them the capital, of course. I would merely transpose the Consolidated Fund issues to the Iron and Steel Holding Realisation Agency, in the sure knowledge that the Agency could dispose of such admirable investments on the open stock market in a very short space of time. Thereby, the whole of the sum concerned could be lifted from the shoulders of the Consolidated Fund and placed properly where it belongs—in the hands of private investors, through the medium of the Stock Market.
My speech this evening, Mr. Speaker, is the purest of pure Tory philosophy—much purer than the intentions of my right hon. Friends the Minister of Power and the President of the Board of Trade seated on the Treasury Bench tonight. They are half-hearted Tories in the matter of State investment in industry.
Let me quote what was said by my right hon. Friend the Member for Woodford (Sir W. Churchill), then Leader of the Opposition, on 17th February, 1951. He said:
I am forced to repeat again that should the Conservative Party be successful in a General Election—which cannot be long delayed however tightly and even passionately Ministers may cling to their offices—we shall at once repeal the Steel Act …"—[OFFICIAL REPORT, 7th February, 1951; Vol. 483, c. 17591
Yes, Mr. Speaker, we repealed the Steel Act, but we have not denationalised steel. We have increased the State stake in steel from £250 million in 1952 to £360 million today. I believe that it should be the purpose, the policy and the objective of the Conservative Party to translate that £360 million of State investment to the hands of private investors within the lifetime of this Parliament—say, within the next four years.
I shall constantly harry and rake with fire the present incumbents of the Treasury Bench in order to ensure that in those four years they adhere closely to the Tory philosophy I have enunciated this evening, supported so amply by my right hon. Friend the Member for Woodford on 7th February, 1951, when he was Leader of the Opposition.

7.5 p.m.

Mr. Jack Jones: One thing that can be said for the hon. Member for Kidderminster (Mr. Nabarro) is


that he never pulls his punches, and is always prepared to pronounce to the House the plain, unvarnished truth as he sees it. In the process, however, he apparently fails to recognise that he is now proving once and for all that State-owned industry is successful, that it has been proved to be successful and is now to go to a number of shareholders—and the greater the number of shareholders the better. Why the hon. Gentleman should object to the whole country being shareholders, I do not know.
The other thing that has been proved tonight has been the actual fact. In 1951, in I957—after various elections—we were told, "You dare to touch any part of industry, let alone the whole of industry—any part of it; dare to put any company under public ownership and it will at once become decadent, inefficient and finally go out of business." We have now heard glowing words from the lips of the hon. Member about the value of the present Richard Thomas and Baldwin's concern, which he said would be a blue chip if put on the open market. This, after all these years of public ownership and control, and working for and on behalf of the State. Tonight, we have heard those prophecies of inefficiency and the like completely destroyed from the mouths of the hon. Gentleman and his colleagues.
Richard Thomas and Baldwin's is one of the finest companies in the country. Earlier, following a gibe, I interjected to say that although during the recession in the steel industry in the early part of last year only 60 per cent. of the industry was at work, the publicly-owned and controlled steel concern of Richard Thomas and Baldwin's, was the only one working full-time. I defy contradiction of that statement.
I happen to have the good fortune to attend a quarterly meeting—I attended one this morning—at which I get all the facts of this industry as reported by the industrial officers of the union of which I am so proud to belong and whose leadership has been quoted as an example to the world. What I hear at those meetings confirms my knowledge of what is going on. I repeat that the story told to the public that nationalisation meant once—let alone after a period—utter decadence, inefficiency and the rest, has been confounded from the

mouth of the hon. Member for Kidderminster himself. What was said would be inefficient, worthless and hopeless is now, in the opinion of the hon. Gentleman, a blue chip investment.
What he and some of his hon. Friends are seeking to do is quite simple. It is the simple story of stark, naked Toryism once again in the saddle. I give the hon. Member credit for advancing and advocating real Toryism as he sees and understands it; complete ownership and control of the basic industries, particularly those that are money spinners, and those where the cream can be skimmed off.
The hon. Gentleman held out a document and talked with a certain amount of glee about the National Union of Mineworkers and the Co-operative Insurance Society buying shares in industry. Why not? They have to live and survive within the capitalist framework. But the hon. Gentleman was not honest enough to go on to tell the House that not one of those shares carried any voting power on control in any of the companies in which they were held. It is voting power and controlling power in the hands of those who hold the shares which control industry which really matter.
The hon. Gentleman told the House—I give him credit for it—that the realisation Agency was given the job of selling £251 million worth of State assets. Instead, the State today has £360 million worth of State money invested in one industry which the Tories say should be denationalised.

Mr. Nabarro: I said that, after the Bill is passed, if it is passed in its present form, the aggregation of State money—for alliterative purposes, I called it the stake of the State in steel—would be £360 million.

Mr. Jones: It will be £110 million more than it was at the time it was to be sold out, provided the Bill is passed. The hon. Gentleman may rest assured that the Bill will be passed, because he will not be in the Lobby tonight to say that it should not.

Mr. Nabarro: The hon. Gentleman should be fair. What I said was that I would support the Second Reading because I wished to amend the Bill in


Committee. It is in Committee that I shall deal with the proposals in it.

Mr. Jones: One must admire the hon. Member for Kidderminster. Whatever else we may think about him, he comes down to the basic facts and he pursues them in language which we are all getting used to hearing and understanding.
It has been said today that the siting of the new strip mills was a matter of social importance and that the strip mill has been sent to Scotland, or pressure has been exerted to take it to Scotland, because of social conditions there. In a society of full employment, where "You never had it so good", can there be any part of the country to which it is necessary to send a strip mill to alleviate unemployment and remove the trials and tribulations of people in distress there? This is again an indictment of the Tories when they say that there is no need for the special deployment of industry because everybody is "having it so good". The fact of the matter, of course, is that the mill has been sent to Scotland partly because of the social conditions there. It is quite right that it should be.
We all remember the days when tens of thousands of men came from the Motherwell area and went to Corby. I could talk at length about the Colvilles group. I do not hold it against the present owners in control, but I have read the history of their company, and it is not very good. There were times when they brought strike breakers up the river in empty apple barrels to break the strikes of men who were fighting for 3s. 9d, a shift, But I must not digress.
The plain fact is that the hon. Member for Kidderminster and others with him are advocating what they believe to be true Tory policy. I do not blame them for doing so. I blame those foolish persons who give them the power to do so, that is to say, the great working masses of this country, many of whom voted Tory and are now regretting it.

Mr. Nabarro: Rubbish.

Mr. Jones: Yes. What I have said is true. But the Tories did not get their power from the steel industry constituencies.

Mr. Nabarro: This Bill is about Richard Thomas and Baldwin's. In my

constituency are two works of Richard Thomas and Baldwin's. How can the hon. Gentleman say that I have no support from steel workers?

Mr. Jones: I did not say that the hon. Gentleman did not have support from some steel workers. I said that he had had support from those who now regretted it.

Mr. Nabarro: Poppycock.

Mr. Jones: The hon. Gentleman may have had support from people who at that time thought that everything would be all right.
Let us come down to what the Bill is designed to do. Why do we need the new mills? Why did we need to spend an enormous amount of money, millions of pounds, just after the war, on this industry which was supposed to be perfect, this industry which everyone in Britain has been told by the Tories was never anything but absolutely perfect? Immediately after the war, when we had a Socialist Government, I was a junior Minister. At that time, we bought one million tons of steel from America and 750,000 tons of steel from Belgium. Some of that steel is still lying in my constituency even today, too bad to roll or even to make scrap of. We paid £60 or £70 a ton for it. We did not pay in sterling or dollars; we paid for it in copper, our strategic reserves of copper which had been dug by the fathers and grandfathers of the men in the Rhodesian Copperbelt who are today denied a vote. Let us have the facts right. We want this money now to be sunk into the industry to make it efficient.
My right hon. Friend the Member for Middlesbrough, East (Mr. Marquand), in his opening speech, spoke about the new plan for introducing the oxygen induction process as if it were something new. I referred to the need for the oxygen induction system when I spoke at the Dispatch Box fifteen years ago. Fifteen years ago we talked about the need for modernisation.
We on this side of the House are not opposed to the use of State money for special purposes and for the preservation of our economic life. That is what it amounts to in the long run. Unless we are efficient in our basic industries and can compete with those who beset us, we


shall fail. We are being beset by competition from the Continent. There are four great new works going up in India. Consumers of years ago are now begining to sell steel. There is a great new works in Eastern Germany, the works at Stalinstadt on the River Oder which I have visited and know something about, and the new works at Magnitogorsk. Great competition is coming in steel. We need to be efficient.
What we on this side object to, and what the country will object to when the story is passed out by the Press as I hope it will be tomorrow morning, is State money being given to private industry from which new plant, new furnaces, rolling mills, and so on, will be created but out of which private industrialists will want to pay too high a dividend back to those who have taken the controlling shares to which I referred earlier. This is unfair and immoral.
The Bill must go through. It will go through. It has given everybody the opportunity to expose to the country once and for all, I hope, the racket—for racket it is—of using taxpayers' money to bolster up so-called private enterprise so that the financial sharks and racketeers may profit thereby.

7.17 p.m.

Mr. Stanley McMaster: I support the Second Reading of this very important Bill. I have listened with great interest not only to the speech of the hon. Member for Rotherham (Mr. Jack Jones) but to many of the other speeches, and I have been greatly dismayed at the amount of time spent on debating nationalisation and denationalisation. This continuous talk of nationalisation, denationalisation and the threat of renationalisation, has a very damaging effect upon the industry. It is time we put an end to political interference in the iron and steel industry.
The Schuman Plan in Europe is under way. The European Coal and Steel Community is rapidly expanding, and production is expanding more rapidly there than in this country. We must take these matters carefully into account. My right hon. Friend the Minister of Power referred to the capacity which he hopes to develop by 1962. He said that, by 1962, the plant will be working to capacity, and there will be need for more plant in the iron and steel industry because

it will only then be able to meet demand.
What we need in the iron and steel industry is a long-term economic plan, perhaps a fifteen-year plan, which is not exposed to political fears or threats. The hon. Member for Rotherham referred to the German steel industry. We must compare the steel industries in Sweden, Japan and America as well as those in Russia and other Communist countries. We must compete if we are to survive as a major manufacturing nation and continue to export so that we can support our population.
This is a very small and highly industrialised country. We support a population of about 52 million. We need to utilise to the maximum all our economic resources if we are to continue not only to expand but to compete and survive. By "our economic resources" I do not mean only our natural resources, like coal and iron ore which so helped this country in the days of the industrial revolution, but I also refer to manpower. That is why I support the Bill. It is designed to assist Colvilles and Richard Thomas and Baldwin's to open new strip mills in two areas of higher than average unemployment.
I should like to remind my right hon. Friends the Minister of Power and the President of the Board of Trade of the position in Northern Ireland. It is interesting to note that Colvilles, which will benefit particularly from the Bill, was at one time owned by the large shipbuilders in Belfast, Harland and Wolff. It had a majority shareholding in Colvilles until it was forced to sell out by the depression which hit the shipbuilding industry between the wars during the late 'twenties and early 'thirties. Colvilles still supply steel plate to Harland and Wolff, the biggest shipbuilding yard in Great Britain. Now that Colvilles are expanding into the production of strip steel, I should like to ask the Minister to plan ahead, not to think of the arguments about nationalisation and denationalisation, to meet the demand for steel which he has forecast will arise in the mid 'sixties. I should like to ask my right hon. Friend whether he will support the financing of a third strip mill in Northern Ireland.
I do not need to remind the House of the unfortunate employment situation in Northern Ireland. In my constituency


and Ulster there are greater labour reserves than in Scotland and Wales. How can this labour reserve be utilised for the benefit of the United Kingdom as a whole? There is a large market for sheet steel in Northern Ireland. We have our shipbuilding industry, our manufacturing industries which are producing durable consumer goods, and a large aircraft factory, Short Brothers and Harland Ltd. Even in aircraft, there is a return to steel, because the Bristol Aeroplane Co. Ltd. is now making a supersonic plane in steel which stands up to the great stress and heat of supersonic flight.
We need more structural steel to modernise our railways, not only in Northern Ireland but throughout Great Britain. It is required for the expanding motor car industry. We should like to see this expansion spreading to Northern Ireland. It would encourage the motor industry in its expansion plans to come to Northern Ireland where we need more employment for skilled engineers who are at the moment unemployed. With a strip steel mill in Northern Ireland industrialists would be encouraged to set up factories in Northern Ireland.
In conclusion, I foresee during the 'sixties considerable expansion in production and a rise in the standard of living all over the world. The markets are immense. The markets in Africa, the Middle East and the Far East are enormous. Trade is increasing. The establishment of a Free Trade Area in Europe and of the Outer Seven will enhance this increase in trade. There is a consumer boom which, if we do not have another major war—and please God we shall not—will continue in the foreseeable future and I hope, at least, throughout the 'sixties. I should like to see the benefits of this boom evenly spread throughout the United Kingdom. I should like to see us in the United Kingdom using all our resources, not only the raw materials to which I have referred, but manpower. I think the Bill is a step in that direction, and that is why I wish to support it.

7.26 p.m.

Mr. George Lawson: It is a pity that the hon. Member for Kidderminster (Mr. Nabarro) was not in his place to listen to the speech of his hon.

Friend the Member for Belfast, East (Mr. McMaster). I notice that the hon. Member for Wolverhampton, South-West (Mr. Powell) has returned to the Chamber. The remarks of the hon. Member for Belfast, East about the interests of his constituents and his concern with the welfare of the people in Northern Ireland were very different from those of the hon. Member for Kidderminster. Since the hon. Member for Kidderminster claims that he and the hon. Member for Wolverhampton, South-West are almost identical in their Tory philosophy, I think that what I have to say to the hon. Member for Belfast, East will apply to the hon. Member for Wolverhampton, South-West.
Where it is recognised that the free enterprise about which we hear so much does not work, Tory Members are very ready to ask the State to give assistance; and rightly so. The trouble with the hon. Member for Kidderminster is that he speaks of a Tory philosophy which does not work and is no longer operative. I take it that this Tory philosophy, this so-called private enterprise about which there is so much talk, thinks in terms of a private enterprise or free enterprise that genuinely wishes to compete. There is no other argument for free enterprise in steel or in any other connection if the separate units of industry are not prepared to get down into the market arena and compete with each other so that the best man, in the terms of the product or the service provided, wins.
If that argument is applied to the steel industry, it will be seen at once that it is not a free enterprise industry. The people running the steel industry—I am not talking of the workers, but of the top men, the steel bosses who are so strongly behind the Government's policy of denationalising steel—do not want the steel industry to function on a free enterprise basis. It functioned on a free enterprise basis during the years between the wars. It was on its hands and knees. It had to ask the State to rescue it. Here, I should like to refer to the words of the late Sir John Craig, a very important man in the steel industry in Scotland. He said that for sixteen years he had the very unfortunate job of going to the shareholders and telling them that there was no dividend for them.
Half or more than half of the steel workers were out of jobs. Those were the conditions of free enterprise, and the steel industry was only rescued from free enterprise by the State coming in and offering protection. Later, the rearmament programme brought markets for the steel industry, and the war produced a huge demand for steel. Since the war, the huge public spending has led to this great and growing demand for steel, and if there is one industry which has let the nation down in the post-war years, in the sense of not producing enough, it has been the steel industry.
Do not let us talk about free enterprise, or those who think of Tory philosophy. Let us see them practise it. Let them show us that so-called businessmen in this country genuinely desire competition. For example, do the farmers desire competition? Do they desire to face the competition of the Danes or the Dutch in terms of dairy produce? Not on your life, Mr. Speaker. The farmers are supposed to be the sturdy independents in our economy. There is no section of our country of which I can think which genuinely wants to stand up to its rivals and say to them, "We will show you, because we are much better than you." That is not a new thing at all. For most of this century, the primary endeavour of businessmen in this country and in many other countries has been to escape from competition.
The steel industry does not control its prices, and does not want to. It does not want to compete over prices, which are fixed by the Iron and Steel Board, and the steel industry wants this to continue. I will return to this point in a few minutes. The steel industry does not determine its own development policy, nor does it want to do. It wants this decided by some other central authority—the Federation, which is the "bosses' union", and the Board. The steel industry does not compete for the purchase of its basic raw materials—for instance, its scrap metal.
A very amusing scene took place not very long ago when the State decided to free scrap from price control. The first thing that the steel industry did was to get together with the scrap metal merchants and fix the prices of scrap. It did not want competition in scrap, or in basic raw materials. They are bought

centrally and collectively, and are distributed throughout the industry at a regulated price, which eliminates competition in these things. Hon. Members opposite should not talk to us about a free enterprise steel industry, or of an industry that desires to operate on the basis of what in the past was considered to be free enterprise, with the competitive characteristic which was generally the case in the last century, but is certainly not the case now.
I am very much in favour of this Bill. There are features of it with which I am in disagreement, and when it goes to Committee I shall have something to say about them. That the State is providing money for essential development, and particularly when it is providing money for this essential development in Scotland, is something with which I am thoroughly in agreement, and I think I can say that all my Scottish colleagues are very much behind me in this matter.
I represent the constituency in which Ravenscraig is situated. Motherwell is the centre of industrial Lanarkshire, and I do not think it will be disputed if I say that industrial Lanarkshire is the centre of industrial Scotland. If this area goes down. Scotland goes down. The hon. Member for Kidderminster and the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) were talking as if this were some little backwoods area, but this is an area that affects Scotland. This is industrial Scotland, and it cannot be left to the whims of private persons to decide its future.
After all, we have no private enterprise scheme to uplift these men's jobs. The noble Lord was talking about the thousands of happy Scotsmen who left Scotland to come down to Corby. Is he aware that the sore of that transplantation from Lanarkshire still remains after years and years? One has only to mention Corby in Lanarkshire to appreciate the resentment that is growing up. In my own constituency, over the last year, one of the waggon firms there was bought by a waggon firm from England, with the result that that firm employing 600 staff in Scotland was closed down. There is deep resentment in Scotland that it should be possible for private persons thus to dictate the lives of others. Public money is required in order to see that


jobs are brought to men, who are more important than the £ s. d. which is so much in the minds of some hon. Gentlement opposite, and where that is the object of the Government, we are very much behind them.
This might be criticism of those who run Colvilles at the present time, but it is our view, and I think I am speaking for my Scottish colleagues, that there would be no strip mill in Scotland had it not been for the united demand of the Scottish people. The Scottish Trade Union Congress is wholly behind this demand, and the Scottish Council for the Development of Industry, Scottish Chambers of Commerce, Scottish local authorities and the Scottish Press, to a man, are solidly behind this scheme. If there was any opposition, it came from Colvilles themselves in the early stages, and only when it became obvious that here was an issue on which Scotland had never been so united did that opposition cease.
There never has been an issue on which Scotland was so united as on this issue since it decided to throw out the English in the early days. The Government wisely recognised this feeling. The Parliamentary Secretary himself was rather doubful about it in the early stages, but then came solidly behind us in the then 100 per cent. united demand. Scotland must have this strip mill, not merely because of the employment which it will provide in Motherwell, because this strip mill and the developments which are taking place are calculated not to provide any more employment. There will be no net gain, and we have put this point before to the President of the Board of Trade. There will be no increase in the number of steel workers actually making steel. Existing capacity will go out, with fewer people employed making more steel.
It is interesting to note that in the last ten years in Lanarkshire, the number of steel workers has declined by about 3,000. This is not a question of the strip mill providing more work, but that the strip mill will be a means of rejuvenating the economy of Scotland. Those of us who care about what has been happening in our country recognise that year after year we have been in a state of relative decline. Measured against what was happening in the interwar

years, there is much work and development, but measured against what is happening elsewhere, our country is in a relative decline. It may be measured against what is happening in the Midlands or in Wales. My hon. Friend the Member for Hamilton (Mr. T. Fraser) gave a figure the other day when speaking on this subject, which brings out the stark contrast, for example, of job opportunities. He pointed out that in December last, for every 100 boys under 18 years of age who were wholly unemployed in all Scotland, only 22 unfilled vacancies were available, whereas, at the same time in the Midlands, for every 100 boys wholly unemployed there, there were more than 1,700 unfilled vacancies. That is 22 against more than 1,700. That is an extreme comparison, but it brings out the contrast.
I repeat that, as we see it, this strip mill and the means by which it will be brought into existence, are vital to Scotland, and Scotland cannot and will not—and I say this in no aggressive sense, though with very deep feeling—lose this chance. I am no nationalist, but I am as strongly attached to my particular part of Great Britain as anybody can be, and I bitterly resent the fact that youngsters from my own area and my own country are not permitted to live and work in their own areas, but have to go elsewhere. I say that if they want to go elsewhere voluntarily, by all means let them do so, and this is a point of view which even the hon. Member for Wolverhampton, South-West must recognise. We do not now agree with the values of the past, and we say that human beings are more important than £ s. d. in so far as a handful of people will benefit greatly from this £ s. d. Therefore, when we speak of this strip mill, we speak from the angle of Scotland. It is something we are determined to have. If Colvilles are providing it, very well. If Colvilles were State enterprise, however, I would be happier.
In introducing the Bill, the Minister made the point that the 1953 Act gives power to make loans in the national interest for industrial developments which would not otherwise take place. The Colville steel strip mill would not otherwise have taken place without the intervention of the State. Part of the price of the strip mill has been that the


State has to find the means by which it is done
To return to the point made by my right hon. Friend the Member for Middlesborough, East (Mr. Marquand), why should not this large injection of public money take the form of equity shares? This is quite shocking. I have watched this matter closely. Let me give the bare outline of the figures. The ordinary shares of Colvilles 10 million ordinary shares at 26s. each, were sold for a total of £13 million five years ago, at the beginning of 1955. Since then, there have been five annual balance sheets. The House might be interested to know how much has been paid out in dividends and how much has been put to reserve during these five years.
There has been paid out in dividends just over £7 million by a concern which cost £13 million—that is, without the strip mill, which does not yet exist. We know what "put to reserve" means; it is moneys which have been earned and are used to build up capacity. We are all in favour of building up capacity. In five years, over £20½ million has been put to reserve. In other words, over a period of five years this firm, which was sold for £13 million, has paid to its shareholders or put to reserve—which also belongs to the shareholders—£27½ million. If the State had insisted that the £14 million given on loan at a fixed rate of interest should be equity shares, how much better off the State would have been, how much more the nation would have benefited. Even allowing the control to function as at present, why should not the nation benefit in this way?
An interesting point in this connection is that at the beginning of 1958, to carry out the second phase of the Ravenscraig scheme, Colvilles raised £6 million on the market. According to the chairman, there was no difficulty whatever in raising the £6 million at 6 per cent., despite what the hon. Member for Yeovil (Mr. Peyton) has said. The significant feature was that the £6 million raised in debentures was to be convertible at option into equity shares. The option still exists for the remainder of the period of five years. On 31st March this year, the people who put up the money can turn the stock which they hold into equity shares at a certain ratio.
For example, on 31st March, the people who hold this loan capital in Colvilles can turn it into shares at the price of 28s. 3d., whereas the market price for these same shares has recently been as high as 83s. There is to be a slight rise in the cost over the next few years, but it is only a slight one rising to a maximum of 30s. 11d. in 1963. By then, if these developments take place, Colvilles will be a giant concern earning vast sums. Nobody can say what the shares will be worth in 1963, but according to the advertisement attracting the loan the holders of the loan will be able to turn it into shares costing only about 30s. 11d. per share. What angers us so much is that the State is denying to itself the right that the company gives to the people who have put up this money. That is all wrong.
Let me briefly mention another point. A steel strip mill, or any other steel mill, is of value to the nation only if it provides steel that other industry will use. It is only of value if what is made from the steel can be sold. This can only be done if the price of steel is not too high. To my mind, the enormous profits that this so-called free industry of steel has been earning are due for very close scrutiny. That a firm such as Colvilles could make in so short a time as much money as I have indicated could only be because it is selling its product at such a high price.
Colvilles does not set the price of its products, neither does Richard Thomas and Baldwin's, the Steel Company of Wales or Dorman Long. The price is set for them, but they are always very happy about it. The price is controlled, like a monopoly price. Clearly, however, the price must be very high if such huge profits can be made and such huge sums put to reserve.
It is difficult to get at the facts, but I have done a little research. Steel consumers who buy large quantities of steel are not like the housewife who buys a bag of coal. She is quick to complain about the price of coal having gone up, but we do not hear much from the fellow who buys the steel. Perhaps he is afraid to complain and feels that if he says too much, his supplies will be cut off. The markets are controlled. This steel production industry is a monopoly.
How high has the price of steel gone? It used to be the boast of the producers that British steel was the cheapest in the world. We do not hear much of this boast now. I have been looking at the Report of the Iron and Steel Board for 1956, which contains charts giving comparisons for the three years 1954 to 1956, inclusive, of British steel prices as against Continental and American prices. The Report makes the point that the gap is narrowing and that there is not as much difference in comparison with prices of German and French steel. After 1956, however these charts ceased to be published and they are not included in the 1957 and 1958 Reports. As a result, one cannot readily discover what has been happening to the price of steel. Even the Iron and Steel Federation, which regularly publishes a list of comparative prices of steel, did not give that list in its current report which was actually published last year. Is that because British Steel is no longer the cheapest in the world?
I want to put another comparison to the Minister. Coal has increased greatly in price, and we understand why. Everybody has heard of the increases in coal prices. We heard a great deal about the nationalised coal industry and about what happens in it, but most people if asked about steel would say, "I think that steel has gone up very little in price". I have done a little research into this subject. I recruited the staff of the Library of the House to assist me. Incidentally, perhaps we do not use the facilities of the Library sufficiently.
I asked the staff to compile for me an index based upon June, 1949, taking the price of coal at 100 and of iron and steel at 100 at that date and bringing the index right up to the present date. They brought it up to December, 1959. It shows that from 100 in June, 1949, coal had gone up to 187·3 by December, 1959, or a rise of 87·3 per cent. Iron and steel had gone up by 81·8 per cent., so that actually there was a difference of only 3 per cent. between them.

Mr. T. L. Iremonger: Would the hon. Member say to what extent coal is used in the making of steel and how the price of coal affects the price of steel?

Mr. Lawson: The Iron and Steel Board in its reports shows that fuel and

power, that is coal, oil, electricity and gas, account for 20 per cent. of the cost of making steel. Therefore, even if the price of coal had gone up 100 per cent. it would have meant only 20 per cent. on the price of steel. Transport charges amount to only 9 per cent. of the cost of steel production, according to the same reports. The index which I was quoting is based on Government figures derived from the Monthly Digest of Statistics, the new digest reconciled with the older one and brought up-to-date.
We agree that coal prices have increased greatly, and with good reason, for the coal industry is a very different kind of industry indeed. Nevertheless, the index shows that the increases in coal prices have differed very little from those in iron and steel prices from 1949 to the present date. It is high time, in the interest of the nation, of our exports, of the competition which firms engaged in heavy engineering, for example, in my constituency face from Italian and French engineering firms, that these British firms obtained steel at a price as cheap as the nation can make it. That is certainly not happening today.
We on this side of the House are very much behind any effort that will build up the steel capacity of the nation, and we from Scotland are solidly behind any effort that will build up Scottish steel-making capacity. But there is much in the Bill that at a later stage will require close scrutiny and I hope that I shall be a member of the Committee that examines it.

7.55 p.m.

Mr. John Eden: The hon. Member for Motherwell (Mr. Lawson) made a long and interesting speech. I will not attempt to take up all the points he made. I readily pay tribute to the passionate fervour with which he speaks on behalf of Scotland, and no one will deny the value of the strip mill to Scotland's economy. Where I take exception to what he said is to his disparaging remarks about competition.

Mr. E. G. Willis: There is no such thing in the steel industry.

Mr. Eden: The hon. Member for Motherwell would be among the first to put forward policies which would breed the very condition which would make


healthy competition well-nigh impossible. Indeed, in the course of his speech he gave some hints of it. He believes that there should be virtually no mobility of labour and, apparently, that there should be little free choice for firms to establish themselves in areas which they consider to be the most economic for the production of the goods they are going to sell.
The hon. Member should recognise that competition means failure as well as success. Yet, if a private enterprise firm employing a substantial volume of labour in his area were to fail he probably would be among the very first to call upon the Government to subsidise it to keep it alive, in order to retain it in being and retain employment for those people—thereby destroying the very element of competition about which he was making such disparaging remarks.
If, in his rather involved remarks, the hon. Member was trying to call for more competition, he must recognise some of the possible consequences of that. If he does not want more competition, he must look increasingly to the State for more and more financial support and recognise that with that must inevitably come an increasing load of taxation on the shoulders of citizens. The hon. Member chose a rather quaint phrase to describe nationalisation. He referred to it in connection with the steel industry as "a rescue operation." I have heard nationalisation described as many things, but never before as a rescue operation. I do not believe that the steel industry looked to the State to be rescued by process of nationalisation. I am certain that none of the other industries that have been nationalised would regard themselves as having been rescued.

Mr. Willis: The hon. Member should look at the railways. Where would they be? Would there by any railways left if there had not been nationalisation?

Mr. Eden: We are waiting for the public to be rescued from some of the consequences of nationalisation. We hope that greater regional autonomy and greater encouragement of competition, even within the framework of nationalisation, on the railways for example, will restore some health to that great industry.
I was reasonably encouraged by the remarks of my right hon. Friend the

Minister of Power in opening the debate when he seemed to give some support to, or to breathe some life into, the words which appeared in the Conservative Election Manifesto at the last General Election when it was said:
We are utterly opposed to any extension of nationalisation by whatever means".

Mr. Ross: What about the Highlands and Islands Shipping Services Bill?

Mr. Eden: I hope that as a result of the debate some of the views of my hon. Friends will have been borne in on my right hon. Friend that our belief is that we should be more energetic in carrying out the pledges contained in that sentence in our manifesto than has been the case so far in the eight or nine years in which we have had responsibility for the Government.
If this is the aim of the Government, and I am glad to have it reaffirmed, it is well known that this is also the aim of the industry, which is anxious that the process of denationalisation shall be completed. It recognises that it has the responsibility of raising on the market the money required for necessary developments. I believe the industry has shown that it is prepared to accept this responsibility.
For instance, there was the statement of the chairman of the Steel Company of Wales which was referred to by my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), who mentioned the fact that the cost of the further developments which his company was envisaging could be met either from internal resources or from temporary borrowing from the banks. That statement has been supported recently by the chairman of Stewarts and Lloyds, who said in January this year that
since the end of the financial year the removal of political uncertainties, at any rate for the time being, had at last made it possible for the company to fund its indebtedness to the banks.
As has already been mentioned, the company's subsequent "rights" issue of ordinary shares met with an exceedingly favourable response.

Mr. Ellis Smith: Then why introduce this Bill?

Mr. Eden: Those statements show that the industry is prepared to go to the money market for the finance


necessary for its developments. I think I should underline the statement of the chairman of the Steel Company of Wales, namely, that
since the end of the financial year we have seen the removal of political uncertainties.
I draw attention to that especially, because now that those uncertainties have been removed, there is perhaps not quite so much need for the State to come to the assistance of Colvilles to the extent to which apparently the Government are prepared in this Bill. It is easy to appreciate that with the threat of nationalisation overhanging the industry, it was difficult to raise a loan on the open market, but the circumstances today are quite different from what they were just before the Election.
It cannot now be suggested that it would be difficult for Colvilles to raise the money required. And surely it is not suggested that under the changed circumstances now pertaining it would be wrong for Her Majesty's Government to review the undertaking given to Colvilles before the election took place? That is the point we have been urging upon the Government today, and it is one which we shall emphasise when the Committee stage of the Bill is reached. From what I can gather, the point will be supported by Colvilles itself, which appears to have every intention of doing its best to draw upon the State £50 million as little as possible, and instead to try to finance as much of the operation as it can from its own internal resources and from the banks.
My noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), in his fine and colourful language to which the House has become accustomed, drew attention to the curious contradiction which now seems to be operating in the way in which my right hon. Friends are extending State patronage, State support and the mantle of State paternalism over so much of private industry. The only purpose of my brief intervention is to lend a quiet and moderate voice to the plea already made so eloquently by a number of my hon. Friends in urging the Government to press on with denationalisation, particularly in the case of the steel industry, in order to free it from the hampering restriction of Socialism which is all too apparent in some of the other industries,

and which we do not want to see burdening the steel industry. We also urge the Government to continue with the efforts, well in keeping with the principles in which we on this side of the House believe, to reduce rather than to increase the extent to which the State participates in the industrial activity of this country.
That is what we expect from this side of the House. We are, after all, Conservatives. If we wanted more nationalisation then presumably we would have voted Labour—

Mr. Ellis Smith: Not in Bournemouth.

Mr. Eden: I believe that nationalisation is fundamentally wrong and that it has been shown to be extremely harmful to the economy of this country. Let us now do what we can as vigorously as possible to call an end to it and to restore this industry fully to private enterprise.

8.6 p.m.

Mr. John Cronin: It is always a pleasure to follow the hon. Gentleman the Member for Bournemouth, West (Mr. Eden). His speeches are delivered in a most pleasant way and they have the agreeable characteristic of brevity. I was rather surprised by some of the things he said and I do not feel disposed to follow his arguments in detail. Some of my hon. and right hon. Friends will agree that they appeared to have been excavated from the deepest stratified layers of Conservative thought. I was a little surprised that the hon. Gentleman should attack so vigorously my hon. Friend the Member for Motherwell (Mr. Lawson), who made an excellent speech based on great local knowledge. I can only assume that the hon. Gentleman attacked him for the purpose of impressing the horny-handed steelworkers of Bournemouth, West.
On this occasion I wish to congratulate the Minister on his speech. I hope that the Economic Secretary to the Treasury will convey my congratulations to the right hon. Gentleman on his remarkably clever speech which seemed to me to draw a veil of obscurity over a situation of unparalleled fiscal impropriety. It was quite an achievement. Of course, one has to be careful if one is Minister of Power these days. The groups behind him and below the


Gangway represent a powerful gang of hon. Members, with their metaphorical razors drawn. A Minister's life could be short if he failed to make some propitiatory remarks.
I should congratulate the Government on getting the fourth or perhaps I should say the fourth and fifth strip mills under way. Clearly, that will have some beneficial effects. It will decrease unemployment and provide more jobs. Economically it will help all those people who derive their living from steelworkers. This is beneficial, and we applaud the development for that reason. Of course, all the people who derive benefits from the strip mills will derive benefits from having worked. That is the important thing. They will receive wages, or perhaps increased wages, for having done actual work. There are other persons, however, who will derive considerable benefit, a group resembling the lilies of the field, for they neither toil nor do they spin. I refer to the shareholders of Colvilles and the prospective shareholders of Richard Thomas and Baldwin's. They will get substantial benefits.
I should like the House to follow me in a very simple analysis of what these benefits will be. We all know that working capital used by industry provides a certain rate of profit. It is generally agreed that the average percentage profit on capital investment in industry in 15 per cent. That is a moderate figure. I see my hon. Friend the Member for Gloucester (Mr. Diamond), with his unparalleled accountancy experience, nodding agreement.
Perhaps I should refer the House to the Monopoly Commission's Report. It approved the profits made by I.C.I. on capital investment, which were in the neighbourhood of 15 per cent. The Commission said that that percentage was usual in industry. I have heard it said that in the steel industry rather more profit is derived on capital investment, but I am prepared to accept the average of 15 per cent.
I suppose that the Economic Secretary has some idea of the interest which the Government will charge on this loan. It may be 4 per cent. or 5 per cent. Let us consider the higher figure. It will mean that a profit at the rate of 15 per cent. on capital investment will accrue to the

shareholders of Colvilles, and the prospective shareholders of Richard Thomas and Baldwin's, less 5 per cent. which they pay for borrowing it, and less taxation. Those shareholders can think in terms of making a profit of about 10 per cent. on what is lent to them out of the Consolidated Fund. Perhaps hon. Members will agree that 10 per cent. of £120 million is a considerable sum of money; one has therefore to think in terms of private persons making a profit, less tax, of about £12,000,000 on the money advanced from the Consolidated Fund. It is not surprising that the chairman of Colvilles expressed considerable approbation of the scheme and said that considerable profit would accrue to the shareholders. It is not surprising that when the Prime Minister made his statement on 18th November Colvilles stood at 30s. but today they are up to 79s. 9d.
That is not, of course, the whole story. Perhaps it would be unfair to press that figure, because the removal of the apparent threat of nationalisation must have affected them. A more impressive figure is that Colvilles ordinary shares on 18th November, 1958, when the Prime Minister made the announcement yielded 5½ per cent. Of the thirteen steel companies quoted in the Financial Times, Colvilles had the fourth highest yield. In other words, the stock market thought it was the least satisfactory steel firm in which to invest. Last week, however, Colvilles were yielding 3½ per cent., and have suddenly risen to being the third lowest. As everybody knows, a low yield usually indicates large prospective profits.
This sudden change in the position of Colvilles in the profits league indicates a great increase in the stock market's assessment of its profitability. The shareholders will do extremely well. Never before has so much been done for so few.
The hon. Member for Orkney and Shetland (Mr. Grimond) expressed some doubt and worry about the departure from the proper standards of fiscal propriety. I am sorry he is not here. He is probably rallying his party at some conveniently cosy place. This is something that we should take seriously. There is no doubt that there is great fiscal propriety. In fact, to find a parallel, one has to look back to the days of the eighteenth century. In those


days some private individuals, and some Ministers, were allowed to hold Government funds, and they were allowed to put the interest from the funds into their pockets. It was only towards the end of the eighteenth century that this practice became discredited, and William Pitt the Younger established the Consolidated Fund in 1787. William Pitt the Younger would turn in his grave if he realised that the Government were lending money from the Consolidated Fund to make 10 per cent. profit, less tax, for private individuals. This is a serious departure from the standards which have slowly been built up in this House of rigid fiscal accounting and behaviour.
We ought to consider how much risk is involved in this loan. There is some risk. We know that the capacity for sheet steel in Scotland is about 150,000 tons per year, but the Government are budgeting for an output of 500,000 Ions. It may be that light industries will be attracted to Scotland, but there is obviously a risk that that might not happen.
Is this loan well secured? Is it the case that the breakdown value of Colvilles' assets is as much as £50 million, plus what they already owe to debenture holders? There would appear to be some risk. Who is taking the risk? Certainly not the shareholders of Colvilles. If the taxpayers are taking the risk, why do they not receive returns commensurate with that risk?
The President of the Board of Trade ought to have a talk with the Minister of Aviation.

Mr. Maudling: With respect, if there is any risk involved, it is the equity shareholders who will bear the risk before the debenture holders.

Mr. Cronin: The risk involved is in getting money back if something goes wrong. If there is no adequate security for the money, there is obviously a risk. I am sure that the Minister would agree with that.
The President of the Board of Trade ought to have a talk with the Minister of Aviation, who last week made a statement about helping financially the aircraft industries. He said:

Suitable arrangements will be made for the Government to participate in the proceeds from sales. The manner in which these will be shared between the Government and the firm will vary and will depend, among other things, upon the proportion of the risks borne by each."—[OFFICIAL REPORT, 15th February, 1960; Vol. 617, c. 958.]
The Government are capable, therefore, of thinking on the lines of receiving some consideration for the risks involved. The President of the Board of Trade must know that when the Finance Corporation for Industry lends money it almost invariably inserts a clause in the agreement that it can receive in exchange equity shares for the loan if that is more convenient to the Corporation. Why cannot a similar clause be written into the Bill? Why have the public to take a risk and receive no commensurate reward?
Let us consider accountability. The directors of Colvilles, led by Sir Andrew McCance, are probably men of the greatest integrity and skill in running their concerns. Nevertheless, they are accountable to no one. Once the House has voted this large sum it has no further control except the limiting control of being able to revise the agreement to some extent in 1962. This question of lack of accountability runs through the whole industry. The directors are accountable to no one but themselves. Technically they are accountable to the shareholders but, as the hon. Member for Kidderminster (Mr. Nabarro) pointed out, there is such a diversification of shareholders that accountability is not a practical proposition.
I hope that the President of the Board of Trade will tell us why there has been so much delay in introducing this scheme, which was obviously necessary a long time ago. Some hon. Members have had the experience, as long ago as 1955, of being stopped in the Members' Lobby by Lobby Correspondents who have asked when the fourth strip mill is to start. Why has there been this delay? The hon. Member for Dorset, South (Viscount Hinchingbrooke) gave the answer when he said that the directors of Colvilles objected to the scheme for a long time. If the right hon. Gentleman has any difficulty in taking the word of the noble Lord or myself on this matter—and it was common knowledge some years ago—I can refer him to an editorial in the


Financial Times of 19th November, just after the Prime Minister made his statement. The editorial said:
What is clear is that Colvilles is to receive financial assistance from the Government for the Ravenscraig expansion. This presumably explains why the company has abandoned its former resistance to the idea that it should go in for production of sheet steel in place of previous concentration on heavy steels for Clyde shipyards, heavy engineering and construction work:
Here we have a case where a few men composing a board of directors can decline to allow a strip mill to be set up. That is the result of the Government's policy in denationalising steel. A few men, responsible to no one, can perpetuate unemployment by refusing to accept a scheme which to a large extent would end unemployment. In 1957 the Iron and Steel Board pointed out that there would be a shortage of 900,000 tons of sheet steel in 1962. That is nearly 1 million tons, and hon. Members on both sides of the House know that the production of 1 million tons of steel is roughly equivalent to £250 million worth of engineering products. In the early 1960s our engineering production, which is so essential to our balance of payments, is to be reduced because of a shortage of sheet steel.
I now turn to the question of Richard Thomas and Baldwin's. Many of us feel some regret that the Minister should tell us that the Government intend to denationalise it, beyond all doubt.

Mr. Jack Jones: Because of the success of public ownership.

Mr. Cronin: My hon. Friend has put his finger on it. Ministers are terrified of upsetting the powerful group that sits below the Gangway on the benches opposite. What has Richard Thomas and Baldwin's done to deserve this? In the eight years or so in which it has been a national concern it has done extremely well. It has kept up high trading profits, and even after the partial slump, specially produced by the Government in 1958–59, it increased its trading profit by 26 per cent.—the highest in the industry.

Mr. Jones: It was the only company in Britain which, during last year, worked complete full time to full capacity, when the recession was on.

Mr. Cronin: I am very grateful to my hon. Friend for that information, which his exceptional experience makes available. The Minister has made it quite clear that Richard Thomas and Baldwin's will be flung to the stock market and gobbled up by the shareholders.
The Minister was quite vehement about it, and firmly emphasised that it must be done. In some ways he reminds me of the little girl who was shown a picture of early Christians being attacked by lions in a Rome amphitheatre and who, when asked to give her impressions of it, said that there was one poor lion which did not get a Christian. That illustrates the Government's attitude.
I know that several other hon. Members wish to make their contributions, which will probably be of much more value than mine, but it seems clear from the debate so far, and from the history of the fourth strip mill, that the arguments for public ownership are undeniable. We have a situation in which a private firm has proved incapable of raising money on the stock market in boom conditions, when this bogy of the threat of nationalisation has apparently been dispersed. We have overwhelming evidence that the interests of Scotland and Wales, and of the consumers of sheet steel as a whole, have been unfavourably prejudiced by obstruction and delays on the part of directors of steel firms.
This is the usual thing in the steel industry. There is an inescapable conflict of interests. The directors must always be cautious and think in terms of profits which they can make from a given capital investment, whereas the Iron and Steel Board must think in terms of what will be in the national interest. The directors usually win, unless the Government intervene, as in this case. The Iron and Steel Board has proved that it has no control over the steel industry. It certainly does not direct the traffic of the industry. It is merely a kind of robot traffic light of which the buttons are pressed by the Iron and Steel Federation, which represents the directors and the shareholders.
Steel is too important to the national economy to be made a matter for Stock Exchange speculation. It is too important to be run by a consortium of directors who think purely in parochial terms, and who frequently neglect the national


interest. I believe that I have with me the trade unions in the steel industry and also all my hon. and right hon. Friends when I say that we shall be able to expand the industry with maximum profit and maximum efficiency only when it is restored to a wide measure of public ownership.

8.29 p.m.

Mr. John Diamond: I wish to support strongly everything which has been said by my hon. Friend the Member for Loughborough (Mr. Cronin). It is remarkable value to have Whips who are both excellent in their duty as Whips and equally excellent in making valuable, accurate and constructive contributions to a debate. It is regrettable that I am unable to pay the same compliments to the Government Whips. I am surprised that they could not produce any Tory back benchers to listen to this debate for the last three-quarters of an hour. I am surprised that they could not produce a single Tory back bencher to support the Bill. Surely the Government Whips could find someone or other among their recently increased numbers of back benchers to support the Bill in addition to the Minister. There have been six or seven speeches from the benches opposite, one of them in full support of the Bill—that of the Minister who introduced it. He was the last person to support this Bill.
That ought to give us cause to think. No one on the opposite side of the House supports this Bill; no one on this side wants to, but hon. Members on this side feel, mistakenly, that they should support it because it provides two strip-mills; but it does not. We should not support the Bill, we ought to vote against it because, if we do not, we are failing in our first duty, which is to protect the public purse. I hope to direct a few remarks particularly to my own Front Bench with regard to that.
My powers of persuasion are limited. I cannot persuade the "host" of Tories listening to this debate to turn into Socialists. I might, however, be able to persuade the House that if we support it on an agreed basis our course of action would be wholly wrong. The agreed basis is surely assuming a Conservative Government with a Conservative philosophy having recently won power from the electorate in a democratic manner.

Assuming this, it is therefore not possible to put a Socialist policy in a Bill of this kind. Surely, therefore, the first duty of this House is to protect the public purse. We are looking after the public purse—the Consolidated Fund, the taxpayers, give it what name hon. Members wish. We are the lenders, and, even more, we are the trustees. It is not our money. We are the trustees for the lenders who are being invited to enter into a transaction which amounts, in the plainest terms, to a breach of trust.
I wish I had the power to persuade all my hon. Friends to vote against this Measure. I feel extremely strongly about Members of Parliament as a group committing a plain breach of trust in a financial matter. I refer the Minister to the statement which we had mentioned many times in January, 1959:
The following are the heads of agreement between Her Majesty's Government and Messrs. Colvilles Ltd."—[OFFICIAL REPORT, 21st January, 1959, Vol. 598, c. 38.]
An agreement was made for the provision of a stripmill and this Bill does no more than it sets out to do.
The purpose of the Bill is to provide loans to these two companies, and the stripmills would be there whether we pass this Bill or not. If we pass it, there will be approvals in the terms in this Bill. If we do not, there will still be the stripmills, but the terms will be reasonable and fair and not grossly unfair to those whom we have to look after.
There are two firms to which we are about to lend the moneys of the trust of which we are the trustees. One is a publicly-owned company, and there is no need to spend a moment on that because lending public money to a publicly-owned company is merely an entry in a ledger and makes no difference whatever. So let us pass straight to the case of Colvilles.
We are proposing to lend money to that firm, a vast sum of money, about £50 million, repayable over a great length of time—I think the final date of repayment is in 1978 or somewhere about then. I have the statement in front of me. The security is nil and there is a right to call on the company to give a second debenture. I do not know whether the President of the Board of Trade has been fully briefed on this.

Mr. Maudling: Yes, I have it here before me.

Mr. Diamond: I cannot help regarding this in the same way as I should the affairs of a client who came to me for advice about an investment of this kind.
We are being asked to lend money with no security but with the possible right to call for a second debenture, and everyone knows how completely valueless is a second debenture. One cannot act on it. All one can do is to buy up the first debenture holder and get into his shoes. We are being invited to lend money, which does not belong to us but for which we are responsible, over a long period of time, completely unsecured, but with the right to call on a second security of negligible value and at a rate of interest which is not precisely defined but which is, apparently, a rate to be determined by
the cost of borrowing by Her Majesty's Government at that date for a similar period."—[OFFICIAL REPORT, 21st January, 1959; Vol. 598, c. 38.]
In short, we are presumably asked to give the Government power to lend money at the rate at which they can borrow, this being a rate which we deny to every local authority for the public purpose of building houses. We have to go without houses in my constituency because the local authority cannot afford to borrow at that rate, yet we are asked to lend £50 million on such terms as no one except the Government can borrow.
It may be said that there is a series of justifications for this. The first justification is that the company itself could not get the money except from Government sources. That has been proved false by the various speeches from back benchers. The hon. Member for Wolverhampton, South-West (Mr. Powell), who is always absolutely accurate as to his facts, made it clear that hundreds of millions have been raised by these companies in recent years, but most of it was before the so-called threat of nationalisation was removed by the General Election. There was no threat of nationalisation before the General Election militating against the ability to borrow money.
The borrowing of money could have gone on because we undertook to pay fair compensation. The criticism which many people make when thinking, in particular, of the mining industry and the railways is that we were overgenerous, but no one can allege that a

Labour Government never paid full and fair compensation. Therefore, there was no justification for the allegation that the steel companies could not borrow at fair rates because of the threat of nationalisation. There never was. The proof of that is that the companies got money at market rates.
If there were any threat of nationalisation, as the lawyers say and which I deny, affecting the power to borrow, that was effectively removed, not in terms of political problems but, as the market shows, as a result of the General Election when the value of steel shares shot up more than the value of any equity share on the market. Accordingly, it is not right to say that this company could not have got the money on the market in the ordinary way.
Suppose it had gone to the market, what would it have had to pay for its money? This will give the answer to what all hon. Members are asking. Back benchers opposite ask why the company cannot go to the market in the ordinary way. We shall come to that in a moment. First let us consider the terms on which the company would have to pay. It is very easy to find the answer. Consider the terms which the company did have to pay. It issued 6 per cent. debentures, a rate at which the Government borrowed. They were secured on a first debenture, not a second debenture.
What did they offer? They offered a share in the equity. Let us be quite clear. Every debenture holder could convert into ordinary shares and has had both secured interest and a potential share in the equity. If anything I am saying is inaccurate I have no doubt that the President of the Board of Trade will correct me. This company went to the market and got its terms which, under a Tory philosophy, a private shareholder can get, assured terms and a share in the equity. Why was it not done on this occasion? In Tory philosophy what is there to prevent a company doing the same thing again for this additional purpose? Everybody who borrows on the market in these days pays these sort of rates and gets these sort of terms.
What if the company said it could not get it on the market? It could have gone to the F.C.I. or the I.C.F.C. They are not prepared to throw money away,


as the Government are throwing it away, out of the public purse. The right hon. Gentleman has to justify this. The terms are lower than any commercial terms available anywhere, and he must justify them. If the firm had gone to I.C.F.C. it would have been told, "We are delighted with the proposition, which is a first-class proposition. How much do you want?" The firm would have obtained as much as it wanted, partly on loan and partly as an interest in the equity.
Let us consider the figures in this company. It has made a profit over the past five years, an average, of 40 per cent. per annum, owing to the controlled price of steel. That is nearly twice as high a rate as Fisons' rate of profit which has been criticised by the Monopolies Commission. As my hon. Friend pointed out, this strip mill will probably earn 40 per cent. on the capital employed. At all events it will earn greatly in excess of the 3 per cent., 3½ per cent., or 4 per cent. which is the rate of borrowing, and the whole of that balance will go to the existing equity shareholders. As my hon. Friend pointed out, that might well mean about £12 million, which is precisely 100 per cent. of the existing share capital. This transaction, into which the Government are inviting us to enter, will be to give, for nothing, to the existing equity shareholders 100 per cent. on their shares. I am inviting the Minister, not to nod his head but, when he replies, to seek to justify this.

Mr. Maudling: It is not a question of inviting the House to enter into the transaction. This was entered into a long time ago without any protest from the House.

Mr. Diamond: I am not responsible for any lack of protest then, nor am I responsible for any lack of a Division tonight. I am doing my best to prevail upon my own Front Bench to take the view that this is an improper transaction and should not be entered into and that it makes no difference to the provision of the strip mills.

Mr. Marquand: I do not know why my hon. Friend says that he is trying to persuade us to take that view. I described the proposal as outrageous.

Mr. Diamond: But when I am outraged I go into the Division Lobby. I

do not think that that action would be misunderstood. I suggest to my right hon. Friends that their action in going into the Lobby would not be misunderstood. The agreement for the provision of these strip mills was entered into a year ago, and they will be built whether we agree to accept the Bill or not. But if we sit down and agree to it now, as a House of Commons will be failing in our first duty, which is to look after the public purse of which we are the trustees.

Mr. Lawson: In my view, and I think in the view of most of my hon. Friends from Scotland, there would be no strip mill in Scotland without some such offer as that made by the Government. At this stage we are not concerned with the money coming from the Government, but with the provision of the strip mill. Unless we have the money we shall not get the mill.

Mr. Diamond: I listened to the speech of my hon. Friend the Member for Motherwell (Mr. Lawson). I was most interested in and moved by it. I congratulate him upon it and I agree with everything that he said, and if this were the only means of getting the strip mill it might be a justification for not voting against Second Reading. But it is not.
I want to deal with this point which my hon. Friend put to me quite fairly. I have shown that these terms are improper terms under ordinary commercial considerations. The company could go to the market and get terms which would he much more onerous. It has been able to do that, and certainly could do it now. We have no reason here, therefore, to offer these terms purely on the basis of it being an ordinary commercial transaction. The only justification would be if the President of the Board of Trade said that if we did not offer these terms and bribe Colvilles in this way we should not get the strip mill.
Let us consider that argument and put it the other way round. We on this side of the House have always said that the main argument for taking the steel industry into public control again was the lack of a sufficient supply of steel. There was under-development in the steel industry. This development was needed. I got that from what the Minister himself said in opening the debate. There were two views. One was that it was needed now, and the view of the Iron and Steel


Board was that it was needed earlier. At any rate, it is needed now.
Are the Government saying that without this bribe being given they could not have got an increase in steel capacity? If so that is 100 per cent. justification for recontrolling the steel industry. They certainly cannot say that without this bribe they could not have the strip mill in Motherwell because they have the power under I.D.C. to prevent it from going anywhere else. To anyone who said that he wanted a strip mill in Wales or elsewhere, the Government could say, "No, we should like it in Motherwell".
Why was it necessary to bribe Colvilles to that extent? If it was not necessary to bribe Colvilles—and I cannot imagine that it was—why are we invited to pay these fantastic terms? Why are we giving the cream to the shareholders and putting up with the skim ourselves?

8.47 p.m.

Mr. G. R. Strauss: In my experience in this House, which is quite a long one, I have never heard a debate on Second Reading of a Bill when there has been more opposition or stronger criticism made from all sides of the House.
Some hon. Members opposite have been angry because the Bill has appeared to them to be a further step towards investing public money in the iron and steel industry and, therefore, instead of it being a Measure for denationalising the industry, which they want to see, it has seemed to them to be a Measure for increasing State participation in the industry. Of course, we have no sympathy with this point of view. All my hon. Friends who have spoken have taken strong objections to an entirely different aspect of the Bill.
My right hon. Friend the Member for Middlesbrough, East (Mr. Marquand), who opened the debate, said that the Bill was outrageous, and even my hon. Friend the Member for Motherwell (Mr. Lawson), who strongly supported the principle of the Bill because of the local employment interest, took great exception to the terms upon which the money is to be lent to Colvilles. Two other of my hon. Friends, the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) and the hon. Member for Gloucester (Mr. Diamond) have gone so far as to say that we ought to vote against the

Bill on Second Reading. They have put forward arguments with which I have great sympathy, as I agree with them that the way public money is to be lent to a private company for the benefit of its shareholders is a violation of all decent principles of public finance.
On the other hand, if we were to vote against the Bill—and this is the dilemma in which we are in—we should be denying the loan of substantial sums of public money to Richard Thomas and Bald-wins and there can be no doubt about the desirability of the loan on the proposed terms; also we should be delaying and may be preventing the building of strip mills in Newport which are urgently wanted in the national interest. We cannot do that. Moreover, we should be delaying and possibly preventing the building of a strip mill in Scotland, where it is also required, from the point of view of local industrial development as well as in the national economic interest.
Therefore, we came to the conclusion that, much as we dislike one important aspect of the Bill, the right place to press our opposition to it is in Committee, when we hope to move Amendments which, I am sure, will have the support of all my hon. Friends. If we voted against the Bill on Second Reading, we should be misunderstood and misrepresented.
For the first time since I have been in the House, I had considerable sympathy with the views expressed by the hon. Member for Wolverhampton, South-West (Mr. Powell), who holds pure and rigid and righteous principles on public finance. Sometimes in the past they have led him astray, but on this occasion he was perfectly right. He said, first, that these huge loans of £120 million go far beyond anything which was contemplated or expressed by the Government when they denationalised the industry in 1953.
I took an active part in the debates on that occasion. It was always suggested to us—I think it was in the mind of the Minister at the time, who is now the Minister of Aviation—that the industry would be sold to private enterprise, with equity shares and preferred shares broadly in proportion, and that there would not be sales of equity shares leaving most of the prior shares in the


hands of the State. That latter possibility was never, I think, mentioned. If it had been, we should have taken strong exception to it. It was certainly not in the Minister's or anybody else's mind that at a certain stage the Government would say, "We are entitled under the Bill to lend not a few million pounds, but £120 million to a denationalised company" and to another which we have been told this evening is likely shortly to pass to private ownership. That goes far beyond anything which was contemplated at the time, and the Government must not defend the Bill on the ground that they are carrying out the objective which they put forward on a previous occasion. This present proposal is entirely new and utterly indefensible, irrespective of the general arguments for or against nationalisation.
It was asserted by the Minister of Power that one of the reasons why the Government made the present arrangement of lending money to Colvilles on terms which give the ordinary shareholders immense financial benefit was that this company could not raise money earlier owing to the Labour Party's policy on renationalising the industry.
I want to make two comments on that argument. First, one of the reasons which we always advanced for nationalising the industry—it was not the major argument, but a subsidiary one—was that, if it was to expand as it needed to expand, it was bound during the coming ten or twenty years to require a larger amount of capital than it could raise from the public in competition with all the other national capital requirements except at a rate of interest that would damage this great key industry. One of our arguments for bringing the industry under public ownership, was to enable the Government to raise this money whenever necessary.
Secondly, the statement that the industry could not raise money because of the Labour Party's policy of nationalisation is a myth created by the Conservative Party and has no foundation at all. It was a politically convenient excuse. Because of the slump the industry had difficulty in raising money in 1958. It was doing badly, profits were falling, there was unemployment. Investors did

not know how far the slump would go, and investment in it was therefore very unattractive. That made it difficult, if not impossible, for the industry to raise the money on the market.
How true is the argument that people were afraid that if Labour won the election and the industry were nationalised we would confiscate the money or part of it which the shareholders had put in? That idea as far as it existed was created by the Conservative Party, by the iron and steel industry and by the financial Press.
It was, of course, contrary to the Labour Party's declaration. We had said throughout that we would pay fair compensation to the investors in the industry. The Conservative Party chose to ignore that and put out the story that we intended to give the investors a raw deal—confiscate their money.
It is true that this view was held in many quarters and that it may have made it more difficult for those companies to get the money they needed on the market. But the Government must not blame us for that. It was the Conservative Party, with its anti-nationalisation propaganda, that created this atmosphere.
The hon. Member for Wolverhampton, South-West was not present when I referred just now to what he had said, but I see that he has now returned to the Chamber. I said that I agreed very largely with his argument that it was wrong for public money to be invested in a private company for economic purposes. I am not using his exact words, but in effect his argument was that there was justification for public money to be invested in a private company when that private company was asked to carry out something that was uneconomic and unprofitable, but that where that private company was asked to carry out something that was economic and profitable there was no justification for such investment of public money. I think I have expressed his views correctly, and I share them.
I also share the hon. Gentleman's view that it would be proper, if that company, being denationalised and private, now wants money for investment purposes in a new strip mill, that it should suffer the consequences of being a private company and go to the


money market. There could be no better time for doing so than the present, when there are boom conditions. In those circumstances, it is wrong for the Government to invest money, as I shall show in a moment, and as my hon. Friend the Member for Gloucester has shown, at terms so advantageous to the company. The company should try to raise the money it requires on the market; but if it did so it would plainly have to pay far more for it than it does when it gets it from the Treasury.
Let us consider closely the consequences of the Government's decision to carry out their agreement to lend money to the company on the terms which were discussed in 1958 and which the Government say they want to stand by. The right hon. Gentleman the President of the Board of Trade a few minutes ago said that those terms were not objected to at the time they were announced in the House. I objected. My only way of doing so was to ask questions, and at Question Time I put the case very strongly that this investment should bear with it a right to some equity shares, and only in those circumstances could the investment of public money be justified. I have not the reference with me, but I made that point clearly on the only occasion which was open to me. Let it not be said that we on this side of the House agreed to the terms arranged by the Government which we are now asked to endorse by passing the Second Reading of the Bill.
What is the position of Colvilles? Let us examine what justification there may be for granting a £50 million loan to this company. All profits which arise from the loan will go not to the public but to the private shareholders of the company. The company is a fine and progressive one. It is really a large group of about 11 companies owning 28 works and quarries. Of course, for a time it belonged to the Government. It was then handed over to the I.S.H.R.A. for disposal. The Agency reorganised the capital and finally put £10 million worth of shares on the market at 26s.
Yesterday, the value of those shares was 74s. It is proper to note in passing that, as a result of this act of denationalisation by the Government, there has been a capital profit of £24 million which has gone to the shareholders of the company but which otherwise would have

accrued to the State. At the same time, of course, the shareholders have drawn out of the company in dividends, considerable amounts. Last year, it was 14 per cent. If this is related to the original sale price at 26s. for a £1 share, it is equivalent to 10¼ per cent.
It is proper also to note in passing that if the company had remained in the hands of the nation it would have had to pay out only 3½ per cent., to service the iron and steel stock, and the difference between 3½ per cent. and 10¼ per cent. has been paid out of the industry to shareholders who took no risk and made no contribution whatever to the making of steel. If that money had remained in Colvilles, it could have been used for steel making, for the benefit of the workers or for other beneficial uses.
But that has not happened. We regret it. No doubt, the Conservative Party rejoices in it, as it was one of the objects, not usually openly admitted, of the Conservative Party when it denationalised the industry to pass this highly profitable industry—it was bound to be highly profitable if the country's economy was to expand—out of the hands of the State and into the hands of private investors. The Tories did that because it is part of their philosophy and outlook. They have succeeded beyond all expectations, as is evidenced by the figures I have just quoted.
I come now to the capital structure of the company as it is today. In private hands there are £10,250,000 worth of ordinary shares and also about £5,500,000 worth of convertible debentures. I am giving round figures. That is roughly a total of £16 million. In public hands, belonging to the Iron and Steel Holding and Realisation Agency, there are £4 million of cumulative preference shares and £10 million of debentures. That is £14 million. So that the existing capital holding of the company is fairly evenly divided between private and public ownership.
Now the Government propose to lend £50 million for a new strip mill which, after long discussions inside the industry and after long delay Colvilles finally agreed to. We were told this afternoon—I was not aware of it—that this proposal was foisted on to Colvilles. We were informed by some hon. Members—I do not know whether it is true, but


this information comes from the Conservative benches—that Colvilles did not want this at all and that it was forced on them by the Government. We can plainly see what happened. The company said to the Government, "All right. We will do this if you, the Government, will provide all the capital needed on terms well below commercial rates." They wanted as low an interest rate as possible, and all the profits resulting from the £50 million investment to go, not to the Government, but to the shareholders, who had already made a capital profit of £24 million out of denationalisation.
This put the Government in a difficulty, a difficulty of their own creation. But at that moment what were they to say? They wanted a strip mill in Scotland. These were the terms which Colvilles put forward and the Government were in the position of either having to say "no", which meant no strip mill, or to acquiesce. They acquiesced. The only alternative would have been to have a public row with Colvilles and it would have plainly been awkward to attack this denationalised company for adopting an anti-social attitude or refusing to co-operate with the Government.
In those circumstances, the Government surrendered and offered this £50 million to the company on their terms. The Chairman has admitted in a public statement that this investment will benefit the shareholders. After the investment of £50 million, there will be £64 million of public money as against £16 million private money in the Company. Out of every £5 invested, £4 will be public money and £1 private money. Yet not one penny of the profit which will arise from this public investment will go to the public.
It would have been perfectly easy and proper and according to precedent to have made this loan to the company matter in a different way. No private banker or finance house, nobody outside the Government would have loaned money on terms like this. When the Finance Corporation for Industry lent substantial sums of money to the steel industry, and elsewhere, on debentures, it insisted—it was perfectly right to do so—that part of the investment should be in convertible debentures and that it

would have the right, if the investment were successful, to get back some of the profit arising from the money which it invested. Why did not the Government follow this precedent? They did not, because they were not in a position to bargain.
As has been said by some of my hon. Friends, the best precedent to follow was that of Colvilles itself. When Colvilles a short time ago borrowed £6 million on debentures it thought it fair that the people who subscribed to the debentures should have the right to convert them into ordinary shares at a later date. The Government would therefore have had an unanswerable case if they had asked Colvilles to treat the public purse at least as fairly and as generously as private investors. They did nothing of the sort.
So we have the situation that public money is to be available, taxpayers' money, absolutely safe money which the chairman of the company says will make profits for the shareholders—it makes no difference whether they are private shareholders, trade unions or anyone else—who already have done exceedingly well out of denationalisation.
In short, this is nothing less than a subsidy out of public money, taxpayers' money, to private shareholders who do not need it at all. In this respect, I think it is not unfair to contrast the willingness of the Government on this occasion to subsidise private shareholders out of public money with their reluctance to provide public money to meet the essential needs of the social services. [Interruption.] Does anybody want me to repeat that?

Mr. Eden: The right hon. Gentleman was saying that my right hon. Friends were starving the social services. Will he look at the Estimates which have already been placed before the House and then reaffirm that statement?

Mr. Strauss: The Government are slowly improving the social services by taking action which they should have taken a long time ago, and to a degree which today is still wholly inadequate. I do not want to be drawn off into a discussion of old-age pensions or other social problems this evening.
I will conclude by saying that the Government must admit—anyhow, their


supporters sitting behind them admit—that they are in some difficulty here. They are in a difficulty in that they promised to denationalise the industry and suggested that it should be done rapidly. They have not done so, but have come forward today injecting a large sum of new public money into this industry on terms which I do not think anyone on either side of the House thinks are defensible from the public point of view.
I would only say to the Government that the difficulty they are in here is very similar to the position they put themselves in when they denationalised the road haulage industry. They then promised to denationalise it quickly and completely, but they found that the doubts we expressed at the time, which they then said were ridiculous, turned out to be true. The road haulage industry was denationalised very slowly, and if at a certain stage—

Mr. Geoffrey Wilson: Was not the reason for that the statement made by the Opposition that if the Government denationalised the industry they would renationalise it without compensation?

Mr. Strauss: I do not want to be drawn away, but it was shortly after the Conservative victory in 1951 that Lennox-Boyd—[HON. MEMBERS: "Order."]—that the right hon. Gentleman who was then the Minister of Transport came to the House, knowing exactly what the circumstances were, and said that he was going to denationalise the road haulage industry—I think he said it would be done in about a year.

Mr. Nabarro: I apologise to the right hon. Gentleman for missing the early part of his speech, but I was having a pint of ale and a sandwich. Would the right hon. Gentleman clear the minds of many of my hon. Friends and myself? What is he really saying about this Bill? Is he saying that he does not want £120 million of State funds put in and that he takes my view that it should be subscribed privately on the stock market? Would he be quite definite about this?

Mr. Strauss: Had the hon. Member been present when I began my speech, he would not have asked that question. I made my position, and the position of all my hon. Friends, quite clear. If the hon. Member will do me the honour of reading my speech tomorrow it will save

the House the tiresome business of hearing my views a second time.
At a certain stage there was a revolt from industry. Chambers of commerce came to the Government and said, "You must not go any further in breaking up the British Road Services. It will do us damage", and the Government stopped. When at the time the Government wanted to denationalise the steel industry we said that they would have great difficulty and that among the difficulties that would arise would be the raising of capital for the steel industry on terms that were reasonable and would not put up the price of steel. We were not listened to.
The denationalisation of the steel industry has taken much longer than was anticipated at the time by the Government. Now the problem has arisen of raising money for it and the Government, as we see today, are forced to put taxpayers' money into parts of the industry in private hands, bringing no return except a minimum interest rate to the public but providing large profits for the private shareholders and giving then in fact a subsidy out of taxpayers' money.
We cannot do anything about it. It is the Government's policy. We can only expose it, hold it up to ridicule and condemn it. We believe that on this aspect of the Government's policy and this aspect of the Bill we have the support of most people in the country who would agree with us that this proposal of the Government is unjustifiable and quite indefensible on any grounds of principle.
When we consider the matter in Committee we will do our best to move Amendments to make the Bill a better one and in particular to protect the public finances and the public interest instead of forfeiting them as this Bill does in its present form.

9.17 p.m.

The President of the Board of Trade (Mr. Reginald Maudling): The Bill that we are discussing today is a fairly narrow provision, but you, Mr. Speaker, have allowed a fairly wide debate on matters referring to the steel industry. I must, however, observe that, wide as the debate has been. I have been left with a large amount of time and I will do my best not to allow Parkinson's Law


to apply on this occasion and to resist the temptation to loquacity and stick to the facts.
I cannot say that the right hon. Member for Vauxhall (Mr. Strauss) stuck to the facts of the case. In fact, I do not think he has read the Bill, because the speech to which we have just listened had little to do with the Bill. The Bill makes provision for funds to be made available out of borrowed moneys rather than out of voted moneys. The question is not whether these loans should be made by the Government to the steel companies concerned, as was announced a long time ago, but whence should come the funds which are made available to honour these loans. That is quite different.
When the right hon. Gentleman talks about the violation of all decent principles and about our action being utterly indefensible, I cannot understand, first, what he is talking about and, secondly, why he will not vote against the Bill. If it is utterly indefensible and violates all decent principles, even the Opposition should surely vote against it. The right hon. Gentleman went too far when talking about our reluctance to provide funds for the social services. Let him look at the Estimates, now and when he was in power, for education, health and pensions. Let him look at the number of schools built and school places provided. Let him look at the real purchasing power of the pensions and at the true value of the National Health Service. Then he will realise that that flight of fancy was not worthy of even the rest of his argument.
But the Bill deals with an industry that is of vital, fundamental importance to our economy and, if I may, in answering the debate, I should like to deal with one or two points that are of particular interest to me as President of the Board of Trade. My concern is, first of all, that the industry should be able to provide the steel which we need for our industry as a whole and particularly for our exporting industries; and, of course, the importance of metal manufactures in our general export trade has increased immensely in recent years. My concern also must be that the prices at which steel is available in this country should be reasonable in relation to our competitors. I have a few figures on that subject

which I think will console hon. Members opposite.
Secondly, I am concerned with the contributions to the export trade made by the steel industry, and it must remain a very important net exporter from this country. Thirdly, I must be concerned that the capital employed in expanding steel production is not wasted, because, although there is great need to expand steel production, there is all the time a great dearth of capital and it would be foolish to waste capital even on expanding the steel industry if that same capital could be better employed in the national interest in some other direction.
Finally, I must be concerned that the industry in its expansion should make a contribution to the extremely important problem of industrial location and of local employment; and, of course, the steel industry is important in this matter not only by reason of the employment that steel itself gives directly to its employees but also by reason of the indirect encouragement of industry provided by the availability of steel in particular areas. On all these points its seems to me that in the present situation, under the present system, the industry, under the guidance of the Iron and Steel Board, is working extremely well. I want to enlarge as I go along on these points.
Turning to these particular loans to Colvilles and to Richard Thomas and Baldwin's, it seems to me that the points which have been made in the debate and should be answered are as follows. First, should these loans have been made at the time they were made? That is a rather important question, because the circumstances at the time were admittedly somewhat different from the circumstances now. Secondly, were the conditions on which the loans were agreed fair and proper? Thirdly, is there any case now in the changed circumstances for rescinding these arrangements or breaking the contracts? Fourthly, if we accept that these loans are right and proper, is it right that we should follow the provisions of the Bill and provide the finance from below-the-line moneys rather than from above-the-line moneys? These seem to me the points which I should try to deal with in my answer to the debate.
The first point is: should these loans have been made in the first place? It is the


Government's belief that public money should not be made available to private industry save in exceptional circumstances, and I want to explain why we considered that the circumstances of these two particular developments were exceptional. There was, of course, at that time, considerable discussion about the need for more capacity for the production of sheet steel and also about the location of that capacity. I remember a fairly fierce controversy which raged at the time about the best location.
The two companies which embarked upon the expansion of sheet steel production were Richard Thomas and Baldwin's and Colvilles, and of the two the former is still a nationalised company. Therefore, I cannot see that there can be disagreement with the proposition that, while a company remains nationalised, further finance for its expansion should naturally come from the Government. I detected during the debate today general agreement that in the case of Richard Thomas and Baldwin's it was the natural means, indeed the only sensible means, to provide loan capital required from Government sources.
I turn now to the question of Colvilles' expansion. Here the location of industry comes into the picture. At that time it was urged strongly, and I think rightly, that if we wanted to to get industry into Scotland using sheet steel, it was important to have sheet steel production capacity available there. Some people said that this was not important because the delivered price of sleet was the same anywhere in the country, but I think the people were right who said that, if we got the sheet capacity there, we should get the sheet using industries to follow. Certainly experience with Pressed Steel and the motor industry since has shown that this view was right. So, clearly, there was a valid reason, not purely an economic but a social reason, for getting some sheet steel capacity in Scotland.
Looking at it purely in terms of economics, I should have thought that the cheapest thing might have been to put the entire expansion of sheet steel production in South Wales. However, looking at it from the other point of view, there was also a strong case for creating a capacity for sheet steel production in Scotland. In my view the

Grangemouth project, talked about at the time, was clearly ruled out because it was not economic whereas Colvilles' project was, and is, in our view an economic project.
Of course it is taking a considerable risk, because there is a company setting up this capacity in advance of the demand for its product, and it is also setting up a new production line not entirely on commercial considerations but also on social considerations. As we have discussed so much recently in this House and in Committee the question of the distribution of industry, it is most important to recollect once again how great is the contribution of the Colvilles' extension to the policy of expanding industry in Scotland.
Therefore, there is one very good reason for Government assistance to Colvilles in this project. After all, the motor car firms and the other firms which are going to Scotland are getting Government help, and throughout the debates on the Local Employment Bill I was pressed by Members of the party opposite to increase the help we are giving to those companies. Why they should now complain of the help given to Colvilles, the basic steel producer, I do not understand—

Mr. Cronin: The objection is to the terms.

Mr. Maudling: I am talking about the terms, if the hon. Gentleman will listen. I was asking why they should complain about Government assistance to Colvilles on terms certainly no more generous than the terms provided in the Local Employment Bill, and probably less generous than the party opposite asked for. It completely passes my comprehension.

Mr. Diamond: Much larger sums.

Mr. Maudling: I am coming to that point. The hon. Gentleman often anticipates my remarks, but does not always anticipate my answers. I am coming to the other question, which is the provision of finance from private sources.
The right hon. Member for Vauxhall denied that it was impossible for Colvilles to raise this money from private sources. He seemed to be arguing, by some strange circumlocution, that if any one was frightening the steel industry with nationalisation it was us and not the party opposite. I find that difficult


to follow, particularly when I look back to what the right hon. Gentleman said as long ago as November, 1951. I am sure that he would not depart from what he said on that occasion. He said:
Moreover we say that, if all or any section of this industry is now to be handed over to private investors, when the time comes, as it inevitably will, to re-transfer the shareholdings to public ownership, those investors should be compensated on the principle that under no circumstances will the total compensation already paid out be increased."—[OFFICIAL REPORT, 12th November, 1951; Vol. 493, c. 663.]
If anything was calculated to be a complete barrier to the raising of new finance on the private capital market it was that.
Although the right hon. Gentleman knows a great deal about these matters, I differ from him. I do not believe that it was possible for Colvilles to raise £50 million on the Stock Exchange for this expansion with a General Election hanging over their heads, with the possibility, however misguided, that some people had in their minds, of the return of a Labour Government. We were faced with the perfectly clear situation that, if we wished to see this expansion of the steel industry, and if we wished to see, as we did, the provision of sheet steel capacity in Scotland which would lead, and has led, to so many other factories for Scotland, we had in those circumstances to provide Government money to finance that expansion. I cannot for the life of me understand why the party opposite should object to us having done what they are now telling us to do with every other industry.
The next point is whether the conditions on which we made loans were right. Here again I think I would follow the hon. Member for Gloucester (Mr. Diamond) and say that the Richard Thomas and Baldwin's arrangement is rather special because, if what the Government lend to the Government is a bit of fiction, then it is one of those classic fictions of financial jargon that one meets so often.
What is more significant is the loan to Colvilles. I should have thought that the terms on which that loan was made were very much in line with the general provisions of Government loans to industry. It is, of course, lent for a fixed term. It is lent up to a maximum figure which may, of course, not be

reached, and I do not think that Colvilles is any more keen to borrow from the Government than we are to see it borrowing from the Government. It is certainly not my impression that private industry as a whole prefers to be in the hands of the Government. It prefers to be with private shareholders.
The agreement says that the rate of interest will have regard to the cost of borrowing by the Government at the date of issue for a similar period. I cannot see that any better provision could have been made. In our view, this is a good investment. We are lending the money on a good security, and really the hon. Member for Gloucester is on a bad point. The first debenture is only £6 million. The security is fairly good, and on the whole this would be a bad week for the party opposite to suggest that the security of private industry is necessarily less than the security of public industry. I think that the security is a perfectly adequate one.
There is no equity participation because we on this side of the House do not believe that when the Government lend money to industry they should have an equity interest in it. We think that it is reasonable for the Government, in special circumstances of the kind to which I have referred, to provide money when it is in the national interest to do so. We believe that these loans should be fully and adequately secured, and that the rate of interest should be a proper one, but we do not believe in the Government participating in the equity.
I feel that the party opposite too often assume that an equity holding is a certain profit. They seem to forget sometimes that there is a danger of a loss. Fortunately, in this case we have been redeemed by the hon. Member for Loughborough (Mr. Cronin), who was so worried about the danger of loss in this industry that he even thought that the debentures we were taking constituted a considerable risk. What risk he would attribute to an equity holding I do not know. How anybody can possibly contemplate the Government holding an equity interest in such a dangerous industry passes my comprehension.
The conditions of the loans, which are in line with general practice in these matters, are properly designed both to safeguard the interests of the taxpayer


and to ensure that the return received by him is a reasonable one.

Mr. Cronin: The right hon. Gentleman has just said that the Government have no interest in the equity. Are we to take it that the Government have no interest in the equity of organisations such as the nationalised airlines and the nationalised gas industry?

Mr. Maudling: If the hon. Member will study the nationalisation Statutes he will realise that the provision concerning paying their way taking one year with another prohibits the existence of an equity. There is no equity where the industry is nationalised.

Mr. Diamond: The right hon. Gentleman said that there was a possibility of risk involved in the taking of equities. This does not prevent their taking convertible debentures, where the Government can have it both ways, at the option of the lender. What is the reason for not doing that, other than what the right hon. Gentleman said, namely, that he does not believe in it? He has not said why he does not believe in it.

Mr. Maudling: I have met many people who believe that one can have it both ways, but I believe that most of them have come to a bad end.
The next question is whether, in the changed circumstances, we should alter these contracts. I should emphasise once more that these are definite agreements, published by the Government a long time ago, on the basis of which these companies have entered into commitments. Therefore, these are firm contracts and we cannot just gaily say, "It suits us to change them. We will do something different." Would there be any advantage in changing these provisions? Once again, the two cases of Richard Thomas and Baldwin's and Colvilles are quite different. The first remains in national ownership, and in disposing of this asset the Agency can readjust the capital structure as is most convenient and advantageous; in fact, it has a duty to rearrange it so as to obtain the best possible price when doing so. Colvilles is a private undertaking, and we have a definite agreement with it for a sum of money to be loaned, up to a certain limit and on certain repayable on a fixed date.

The company has the right to repay early on certain conditions, and those conditions are designed to make sure that the company is not able to repay the loan in order to re-finance more cheaply from some other source. That is for the protection of the Government.
So far as I know, there is no final barrier to a re-financing of this money from private sources, should it be in the public interest to do so, but I should point out to my hon. Friends that there is a large volume of prior charges still to be disposed of, and I do not see any reason, in the disposal of those prior charges, for giving priority to this one over the existing ones.

Mr. Nabarro: My right hon. Friend has used the term "re-financing". What is he referring to? Is he referring to the issuing on the stock market, of sums already lent by I.S.H.R.A. to the denationalised steel companies, or to re-financing the proposed Consolidated Fund loans under this Bill, via I.S.H.R.A., to the stock market?

Mr. Maudling: I would not rule out either of those things. I repeat what my right hon. Friend said earlier. The Act we passed in 1953 provided for the denationalisation of this industry, and we intend to carry out the provisions of that Act. Richard Thomas and Baldwin's is not an exception to that Act. We intend to carry out its provisions, but I am afraid that I cannot provide my hon. Friend the Member for Kidderminster (Mr. Nabarro) with a timetable. That really would not be in the public interest as I think he must agree. My hon. Friend always asks for a timetable when he knows that he will not get it.

Mr. Nabarro: No, I did not ask for a timetable, my right hon. Friend is being unfair. When he reads the OFFICIAL REPORT tomorrow morning, he will find no reference to a timetable in any part of my speech. I was asking for a term to be put on the termination of the activities of I.S.H.R.A. I want it to be done before the next election.

Mr. Maudling: My hon. Friend wants to know when the train will arrive, but he does not mind about the intermediate stations—I get the point. But I am afraid that in either case I cannot satisfy him. I hope he will be satisfied


by my saying that we intend to carry out our statutory responsibilities and that the firm of Richard Thomas and Baldwin's is not in our view an exception to those responsibilities.

Mr. Marquand: Since the Minister has said that—with which I do not agree—would he tell us whether he agrees that it would be fair and reasonable to go ahead and dispose of all the prior charges in companies where equity has been sold, before disrupting Richard Thomas and Baldwin's?

Mr. Maudling: I think the actual order of the disposal of these assets must be left to the Agency which has the responsibility of marketing them in such a way as to get the best possible price. I think it would be wrong to fetter its responsibility in this matter, but I am sure it will take close note of what the right hon. Gentleman has said.
The other point I think I ought to make is whether we are right in putting this particular provision on funds below the line. I must admit there is a certain amount of theology—a word which is rather popular at the moment on the other side of the House in a different connection—about this line. I have never been entirely clear about the difference between above the line and below the line. We shall find capital items on both the revenue and expenditure side of the national accounts above the line and below the line. When we get to certain items it is difficult to say in economists' terms whether the State is purchasing capital items, consumer durables or revenue items. We must not press the analogy too far.
I should have thought that in this case there is a clear argument for putting this expenditure below the line. Below-the-line expenditure, that is Consolidated Fund expenditure, is expenditure, as was said by my right hon. Friend, which will earn a yield and which will be repaid. I should have though that in the case of this loan there was a particularly strong argument for placing the finances below the line, rather than in the Votes, because here we have the Government making commitments, which we think quite proper and which certainly were not opposed when we undertook them, to provide certain finances over a period

of a few years. That, surely, if anything, is an appropriate item to go below the line in our national accounts and be financed by creating certain capital assets rather than appearing on the funds and thereby disrupting the revenue accounts.
I will not enter into the question of the effect of this on the national economy, partly because I should be anticipating the Budget of my right hon. Friend—about which I know nothing and which therefore I could not anticipate—and partly because the mysteries of the economics which attend on this division are a little too much for me. But I think that, as a matter of national accounting, there would be general agreement that it is sensible to place the provision of these two large loans of money, like loans to nationalised industries and to local authorities, below the line rather than in the current expenditure items which normally go above the line.
I hope I have covered a fair range of the points which have been raised on the particular question of the loans and their place in the national finances. May I now take up one or two points which remain about the industry generally, because clearly this Bill can be fitted into the picture of the industry as a whole.
The first concern of the Board of Trade, as I explained earlier, is to ensure that the industry is providing adequate steel for our export industries. Of course, it is very difficult to fit the size of the industry exactly to future demand. Hon. Members opposite sometimes tend to ask why there is too little steel at this time and too much steel at another time, but it is not so easy to tailor these things exactly to one another. The size of the projects in the industry are so enormous and the demand for steel is so volatile. There is a very active international market and things like the American steel strike—which I do not think anyone could have predicted two years ago—make it difficult in the case of plate steel to plan to meet the increased demand.
Of course, it is a good thing to have a margin of capacity. On the other hand, I think it unwise to have too much capacity, for this country for many years to come will have a shortage of


capital, and to waste capital on providing unneeded capacity for steel production seems rather unwise. My right hon. Friend referred this afternoon to the current supply and demand prospects. It certainly seems that the prospects for the industry at the moment are very healthy and the expansion of production is encouraging.
Also, the position of prices is worth looking at, because one or two hon. Members opposite have suggested that the price of British steel should be lower. When we look at it, we find that home prices in the United Kingdom are well below those of the United States and Japan and, if we compare the open hearth quality, I think our prices are generally lower than those on the Continent. Certainly the British motor industry gets the cheapest sheet steel in the world. While prices on the Continent have been hardening, prices in this country in the last eighteen months have fallen by 2½ per cent. to 3 per cent. If we look at the prices for plates of cold reduced sheet in this country compared with America, Germany and other Continental countries, we find we are the cheapest producers. If the industry were as inefficient as some hon. Members have attempted to suggest, I do not think that would be so. The fact is that under the present dispensation of private ownership, with supervision by the Board, the industry is producing very large quantities of steel at highly competitive prices.

Mr. Lawson: This was a point with which I was particularly concerned. Could the right hon. Gentleman tell us to what extent the gap between the price of British steel and French and German steel has been narrowing? For example, could he compare the rise in the price of steel from 1949 with the rise in the price of coal?

Mr. Maudling: That is a pretty hard question to answer off the cuff. The price of coal itself is a very large factor in the price of steel and the comparison might be vitiated. A comparison with French steel prices would be rather artificial because, since the last devaluation of the franc, French steel prices would probably be found to be the lowest on the Continent. I think that the price of British open hearth qualities has remained very competitive with any

European competitor. That shows itself in export figures, especially in the net exports of the industry, which is the important thing.
We hear criticism about the import of sheet, but very often we import one quality and export another. It is the net result of the trade two ways that matters. The net exports of steel in 1959 were at the level of more than 2 million tons—146 million—compared with the pre-war average of 680,000 tons. There is an enormous net export of steel it present and when we consider how highly competitive the world steel market is, it is a great tribute to our industry that it has been capable of achieving that result.
The next criterion which I think we must apply to the efficiency of the industry under the present set-up is whether it wastes capital. There was a particularly good example of the working of the Iron and Steel Board in the provision of strip capacity in South Wales recently. The House is aware that there was another project from the Steel Company of Wales to set up a sixth strip mill, but when the Board looked into this it found that it was possible to provide for slab from the Port Talbot works to be processed at Richard Thomas and Baldwin's and then returned as hot coil to the Steel Company of Wales for further processing into sheet and tinplate.
The result of the Board's activity in those circumstances has been that we have exactly the planned capacity for sheet and tinplate but at a saving of £13 million in capital expenditure. When I remind the House that we have to have regard to the shortage of capital in this country and to the great need to ensure that the available capital is employed as efficiently as possible, I think that hon. Members will agree that that is a very good example of the way in which the Iron and Steel Board and the present system can ensure that the steel industry is meeting the needs of the nation.
My hon. Friend the Member for Belfast, East (Mr. McMaster), as in the past, asked us to ensure that we did not forget Northern Ireland in our industrial location policy. I am very happy to assure him that that is always very much in our minds. I only wish it were possible to guide or persuade more industrial expansion to Northern Ireland, but the basic condition for any


such expansion is that there should be a vigorous development in the economy here and that, in turn, will depend upon the activities of private enterprise.
I have done my best to deal with the points raised by my hon. Friends the Member for Bournemouth, West (Mr. Eden) and the Member for Kidder-minister in pointing that out that the Government do not believe as a principle in State patronage but, on the other hand, that we do not believe it wise to withhold State assistance from an industry when it is clear that that industry needs help, that such help is in the national interest and that such help is not forthcoming from private sources. While we may from time to time argue whether these principles have been properly applied in a particular instance, I hope that my hon. Friends will accept that they are reasonable principles for us to adopt in dealing with these matters.
I am not sure whether the Labour Party oppose the Bill or not. They seem to have had divided counsels about it; we shall no doubt discover shortly. They have told us that the Bill violates every principle and is indefensible, but I gather that although they think it unprincipled and indefensible, they nevertheless regard it as a good Bill and on the whole will vote for it.

Mr. Diamond: Many of my hon. Friends have suggested that although the principle of providing these two strip mills is acceptable, the details of the financial provisions are totally unacceptable and will have to be altered in Committee. Having regard to the agreement which has already been made, does the right hon. Gentleman say that it is not open to the House in Committee to alter the provisions in respect of the terms of the loans?

Mr. Maudling: It is not for me to say what may happen in Committee. I do not find in the Bill any reference to the provisions of these loans. This is a matter for the House when the time comes. The point which I was making, which seems to have escaped the hon. Member's notice, is that the purpose of the Bill is not to settle the terms of the loans, because they were settled and were announced to the House by my right hon. Friends a year ago. They may have escaped his notice, but that is a fact.

The question now is solely whether the provision for these loans should be made by Parliament out of voted moneys or out of the below-the-line expenditure. To what extent that will permit amendment in Committee is not for me to predict.

Mr. Marquand: Is the right hon. Gentleman saying that a statement by the Prime Minister takes away all the legislative authority of the House of Commons?

Mr. Maudling: No, but the absence of criticism at the time takes away most of the authority for criticising a year later.
I am a little surprised that the Opposition have not been more vigorous in their criticism of the Bill. I should have thought that, on the whole, with their current difficulties and troubles, they might have united on the old cry of the wickedness of the Tories and the way in which we are giving money to the wicked capitalists. I have had a little difficulty in discovering what precisely is their view on this question. Although the leader of the Labour Party still reaffirms the need for public ownership of steel, the right hon. Member for Battersea, North (Mr. Jay) says that it would not damage the basic aim of the movement if they agreed to leave steel outside the bounds of public ownership.
I think that on this, as on so many things, we on this side of the House are very disappointed today not to have been more enlightened. I know that it is a little indelicate to intervene in these private arguments, although they are conducted across the columns of the public Press between London and Nottingham, but I think that we might have had a little more clear affirmation as to the extent to which the Labour Party agrees or disagrees on the nationalisation of steel. I will give way always to the voice of the authority, if the hon. Member wishes to intervene.

Mr. Mendelson: What was the right hon. Gentleman doing this afternoon when my right hon. Friend the Member for Middlesbrough (Mr. Marquand) was opening the debate, and making a clear declaration that we were in favour, and continue to be in favour, of the common ownership of steel? Was he doing something else or listening to the debate?

Mr. Strauss: Before the right hon. Gentleman makes any further comments about any disagreement which may exist on this side, will he settle the disagreement between the hon. Member for Kidderminster (Mr. Nabarro) and himself'?

Mr. Maudling: In fact, I have settled this as the right hon. Gentleman would know had he listened to me. So far as we still disagree, no doubt we can continue the discussion in Committee.
My impression was that I had endeavoured to deal with the points made by my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) in the course of my speech.
I listened with very great care to what was said by hon. Members opposite this afternoon, but I am still not quite aware of the real authority upon which their statements rested.
We have come to the end of a lengthy debate which has ended a little earlier than expected. I have done my best, while avoiding the dangers of Parkinsonism, to put before the House the reason for supporting the Bill, and as we have heard nothing from the Labour Party officially to lead us to suppose that it will vote against the Bill, I trust that it will be given an unopposed passage.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. E. Wakefield.]

Committee upon Monday next.

Orders of the Day — IRON AND STEEL (FINANCIAL PROVISIONS) [MONEY]

[Queen's Recommendation signified.]

Considered in Committee under Standing Order No. 84 (Money Committees).

[Sir GORDON TOUCHE in the Chair]

Resolved,
That, for the purposes of any Act of the present Session to authorise the payment out of the Consolidated Fund of loans to be made for capital purposes by the Minister of Power in pursuance of arrangements under section five of the Iron and Steel Act, 1953, it is expedient to authorise—

(a) the issue out of the Consolidated Fund of any sums which are to be advanced by way of loan by the Minister of Power under arrangements under section five of the Iron and Steel Act, 1953, which require the sums

to be applied to defray, expenditure properly chargeable to capital account (including the provision of working capital), but so that sums so issued shall not exceed one hundred and twenty million pounds;
(b) the raising by the Treasury in any manner in which they are authorised to raise money under the National Loans Act, 1939, and the payment into the Exchequer, of any money needed for providing the sums authorised to be issued under paragraph (a) of this Resolution, or for repaying to the Consolidated Fund all or any part of the sums so issued;
(c) the re-issue out of the Consolidated Fund of such of the sums paid into the Exchequer under subsection (7) of the said section five of the Iron and Steel Act, 1953, as represent interest on, or other payments received by the Minister of Power in respect of, the advances made by him out of the sums authorised to be issued under paragraph (a) of this Resolution, and their application in redemption or repayment of debt or, in so far as they represent interest, towards meeting such part of the annual charges for the National Debt as represents interest.—[Mr. Wood.]

Resolution to be reported.

Report to be received Tomorrow.

Orders of the Day — WAR DAMAGE (CLEARANCE PAYMENTS) [MONEY]

Resolution reported,
That, for the purposes of any Act of the present Session to authorise payments in respect of the clearance of war-damaged land, it is expedient—

(a) to validate payments made before the commencement of that Act and purporting to be made in consequence of any Direction under section twenty of the War Damage Act, 1943, and
(b) to authorise the charging on, and issue out of, the Consolidated Fund of sums required by virtue of provisions of the said Act of the present Session authorising payments in respect of the carrying-out of clearance work on developed hereditaments which have sustained war damage.

Resolution agreed to.

Orders of the Day — OFFICES [MONEY]

Resolution reported,
That, for the purposes of any Act of the present Session to make further and better provisions for health, welfare and safety in offices, it is expedient to authorise the payment out of moneys provided by Parliament of any increase attributable to the said Act in the sums payable by way of Rate-deficiency Grant or Exchequer Equalisation Grant under the enactments relating to local government in England and Wales or in Scotland.

Resolution agreed to.

Orders of the Day — HOUSING ESTATE, STROUD (REFUSE TIP)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. E. Wakefield.]

10.0 p.m.

Mr. Anthony Kershaw: I am grateful for this opportunity of bringing before the House a matter of interest to only a few people living in my constituency but which is none the less important to them. I apologise to you, Mr. Speaker, for the fact that my voice is hardly clear. I hope that my hon. Friend the Parliamentary Secretary will be able to hear enough of what I say to enable him to give me the adequate reply which I confidently expect from him.
This matter arises because of a site in the middle of a housing estate called the Gannicox Estate near Stroud, which it is proposed to fill up by means of dumping household refuse together with spoil to make a playing field. The housing estate lies on three sides of this ancient quarry which requires to be filled up. Seventy-five of the houses which surround the site lie in such a position that the prevailing wind in that part of the world, which is a south-west wind, will blow from the proposed refuse dump towards them. The houses are extremely close. Twelve of them are within perhaps three to ten yards of the refuse dump, and the remainder are all within varying distances up to 200 yards. In the other direction—after all, the wind does not always blow in the same direction—there are a further 55 houses all equally close to the proposed dump, and a girl's technical school. All these are within 100 yards.
It is admitted on all sides that whilst the dump is being filled in there will be a substantial nuisance from the operations which are necessary to fill it. Certainly there will be smell. There will probably be rats and other forms of pests. There may be a certain amount of smoke if burning takes place. The object of filling the depression is to provide playing fields for the girls' technical school at Stroud, which stands a short distance from the site. It is said that the provision of extra playing fields for the school is a matter of extreme urgency

and that no other method of filling the hole can possibly be employed except by the dumping of household refuse in it.
The provision of playing fields has been before the governors of the school for some time. It has only now been found to be a matter of such very great urgency. I believe that it is also proposed—I am not sure about this—to employ part of the spoil from the present playing field to fill this depression. That operation will put all the playing fields out of action for a certain time and will not be nearly so quick as keeping the existing fields and filling the depression with proper spoil in due course.
I believe that it is within the knowledge of my hon. Friend that immediately across the road from the girls' technical school there are the urban district council playing fields, which are not in constant use and could be utilised for the time being while the site is being filled in accordance with the plans which are to be made.
I believe that the filling of this depression with spoil and household refuse will be quite a lengthy process. I am told that it will require 100,000 cubic yards of material, which will weigh approximately 50,000 tons. It is a condition of the filling of the quarry—and I welcome this, of course—that the household refuse should be covered on each occasion by as much as 9 inches of soil. It will be necessary therefore to deposit half a ton of soil for every ton of household refuse brought in.
I suppose the minimum rate of progress for filling in this spot should be about 400 tons a week. That represents four or five large lorry loads every day. I understand that the arrangements made by the appropriate authority for filling in this depression include the provision of only one lorry, and I should like to know what happens if the lorry breaks down or the driver has 'flu, as often happens at this time of year. Are those concerned satisfied that an adequate rate of progress will be maintained over the years that the job will take?
How long will the work take? I believe it is expected to last at least two years—a substantial time—during which these residents and others will suffer great inconvenience. It might take longer—estimates of up to five years


have been given to me. How long is it proposed that this filling should take?
It is not necessary from any point of view, except for the provision of playing fields, that this site should be used. Both the urban and the rural district councils have ample sites elsewhere that they are at present using, and which will not be filled in for some time to come The feeling is that this work is being undertaken entirely at the request of the county council education committee.
In an area such as the Cotswolds there should be ample spoil available to fill this site. A lot of reconstruction and other building is going on, a large amount of quarry stone is available in the neighbourhood, and there is a lot of building of schools and other premises in process. In that uneven country, where so much levelling is necessary, such work should surely provide a very large amount of spoil. Indeed, a few hundred yards a way, the Uplands Secondary School is at present being built, and will, I believe, provide some thousands of tons of suitable spoil.
Whether or not ordinary spoil could be used, or whether it is necessary also to call for household refuse, there is the point which so often unfortunately arises when private property is affected by public purpose, of whether or not adequate or fair notice has been given to those who have to bear the brunt of the public purpose.
On 17th November last, a meeting was called at the girl's technical school by the governors of the school, and I am sure they acted very rightly in calling it. The statutory notice that the site was to be filled in in the way described was issued on 9th November.
An impression—perhaps only an impression—was received by those who were affected and who attended the meeting that the decision had been taken before the meeting was called. This impression was reinforced by the fact that, so I am informed, at the meeting, it was said—I do not know by whom—that the meeting was a courtesy meeting called by the governors of the school in order to inform people likely to be affected what the proposals were. The residents were not given the impression and certainly did not understand that they had any rights arising out of the meeting or that they were able to make legal objections at that time.
The combination of these facts has given to the residents on the Gannicox Estate the impression that, by the time they were asked for their opinion and they were invited to attend the meeting on 17th November, the matter had been already decided by the county council against their immediate comfort and interests.
I want to make it quite clear that the residents on the Gannicox Estate do not for one moment say that this site should not be used for playing fields, the value and usefulness of which they fully appreciate and wish to forward. What they say is that the site should not be filled with household refuse. They believe that adequate spoil is available in the neighbourhood to fill it. They say that, if spoil were used, the job would be done more quickly and efficiently for the purpose because spoil does not need to settle in the way that household refuse does and the site could be used for playing fields much sooner. It is not denied by anybody that the site will be extremely offensive during the time when it is being filled with household refuse. The residents doubt that enough lorries are being used, and they doubt that the speed of the work will be adequate to finish the job as quickly as possible so as to obviate the nuisance in good time.
They feel also—how often does this arise in cases of this kind—that they did not have an opportunity to prepare their case. This is perhaps a small matter for the House of Commons to consider, but we must realise that, for those who live there and for those who will benefit from the playing fields in due course, it is something of personal importance. I am very glad to have the opportunity of giving public expression to the anxieties and loyalties which are felt. This is, I am sorry to say, yet another case in which, although the purpose is a good one, private persons who are about to suffer inconvenience and financial loss—for the time being their houses will be unsaleable if they wish to sell them℄feel that they have not had time adequately to make their representations, in spite of all the machinery which the House of Commons provides, in spite of the very fair treatment which local authorities always attempt to give to people placed as these residents are, and in spite of the greatest good will.
Although it is now, perhaps, rather late in the day, I have sought this opportunity to voice the objections and fears of the residents on the estate. Although they admit the very good public purposes which it is intended to achieve through the provision of playing fields, they wish that those purposes could be achieved in a way which would not cause so much inconvenience.

10.15 p.m.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Sir Keith Joseph): When a household refuse tip is to be sited in the midst of housing, as is the case here, it is very understandable that local residents should be worried. It is equally understandable that their case should be as vigorously and properly put as my hon. Friend the Member for Stroud (Mr. Kershaw) has put it, despite the trouble with his voice. I hope to show, however, that the decision to allow this household refuse tip was taken only after the most careful deliberation and consideration of the objections made against it. All the facts which my hon. Friend has mentioned were carefully studied.
I should first explain the legal position. An application for planning permission to use this site for household refuse was made to the Gloucestershire County Council, and, since a household refuse dump is one of the uses of a site which, under Section 36 of the Town and Country Planning Act, 1959, is required to be advertised as possibly an ill neighbour, the local authorities quite correctly advertised the intention to use it for this purpose. As a result, local residents were given the opportunity to object, and they very properly used that opportunity. In due course, a meeting was held, as my hon. Friend has explained, and the objectors were invited to attend. Officers of the local authorities concerned were present to hear the objectors' views and to answer questions.
After this had taken place, the local planning authority gave planning permission, but only subject to a number of conditions, some of which my hon. Friend has mentioned. The procedure laid down by Parliament was precisely followed, but I will try to meet the objections made by my hon. Friend as I go along.
The procedure having been correctly followed, my right hon. Friend has absolutely no status here except the ultimate reserve power to revoke a decision by a local planning authority. My hon. Friend will realise that this reserve power of revocation is very rarely used and that normally a local matter such as this is, by the decision of the whole House, particularly of the party to which my hon. Friend and I belong, properly left to the local authority provided that it has taken into account all local interests and objections.
I now come to the facts. The site is in the midst of a residential area. There is no argument about that, although I might question the figures given by my hon. Friend. It is true that one pair of houses is separated only by a narrow road from the extreme verge of what will be the tip, but all the other houses have a garden as well as a narrow road between them and the boundary of the tip. One of the conditions laid down by the local planning authority was that the tip should be enclosed before any tipping begins by an 8 foot high close-boarded fence. I do not believe that it is probable that that fence will be on the extreme verge of the tip. Thus there will be another few feet, probably, between the nearest house and the tip. Broadly, I accept, as my hon. Friend said, that the tip will be in the middle of a residential area, but such tips often are. This is not unique, and tips, to be usefully accessible to all local authorities in the region, are often set in the midst of residential areas.
My hon. Friend listed a number of nuisances which the tip will cause, and, although he said that some of these elements of nuisance would probably be present only while the tip was being filled, he gave the impression that some of them would continue long after it was filled. I should like to deal with them in detail. My hon. Friend spoke of smoke, rats and smell—certainly an evil mixture. But the conditions laid down by the local planning authority impose an absolute requirement, first, as I have said, to fence the site with a high close-boarded fence, secondly, to use insecticide, and thirdly, as my hon. Friend has explained, to cover with nine inches of inert material both the top and sides of the freshly tipped material every day. I can assure my hon. Friend that the local


authorities concerned intend to use a bulldozer to flatten, scrape and cover the material, so that no interstices shall be left in which any live animals, including rodents, can hide themselves.
An additional precaution laid down in the conditions imposed by the local planning authority is that no lorry leaving the site shall be able to take out any of the household refuse on its wheels, and thus infect the road. There is to be an area of clean, hard standing, and an arrangement to clean or scrape the wheels of any lorries leaving the site, so that the neighbouring roadway will not have any household refuse spread upon it. I am assured that there are other refuse dumps of this sort, and from the conditions imposed there is no reason to fear that even during the construction there will be any more inconvenience from this site than would arise in the course of any normal building, site levelling, site filling or clearance operation. Once the tip has been finished the neighbourhood should be improved, as my hon. Friend recognised, by the desirable prospect of a playing field. I would hate to list to my hon. Friend the number of public and private buildings which today stand upon the refuse heaps of centuries in the towns of England.
I have tried to deal with the nuisance element, and I turn now to the fact that the site itself was not a place of admirable amenity even before this project was planned. I gather that it was used for unauthorised tipping, though not necessarily household tipping. It was used as a poultry run, and is of a rather derelict and untended appearance. As my hon. Friend has recognised, the area will he much improved when the job has been completed.
He also recognises, and says that his constituents recognise, that the object is a commendable one. What his constituents object to is the inconvenience, especially during the filling process, and he rightly asks how long this will take. He has his main figure correct. It is thought that the tip will take about 100,000 cubic yards of refuse, but this will involve not, as my hon. Friend thought 50,000 tons; it will involve about 25,000 tons of refuse, and it will therefore take a shorter time to fill, because it is expected that about 200 tons of household refuse will be deposited

each week, instead of the 400 tons that he expected, and that 200 tons will occupy between 800 and 1,000 cubic yards. The operation will therefore take between two and two and a half years, and after that time the refuse tip will have been filled.
My hon. Friend has not been correctly informed about the lorry situation. The tip will be served by eight lorries, five of the rural district council and three of the urban district council, so that there should be ample provision both to deposit the 200 tons and to look after any occasional sickness of the drivers.
There are two main reasons for this tip. The first is that a tip is needed. My hon. Friend did not deal with that question in detail; he said he thought that there were plenty of other sites in that area. The fact is that the tips at present in use both by the urban and the rural district council are rapidly being used up, and they have decided that the site they have selected is the most accessible and convenient—and they know the area extremely well.
The second reason is the universally commended reason of acquiring an additional playing field. My hon. Friend wonders whether this second reason could have been achieved equally well by accepting normal builders' spoil. The fact is that if this were done it would take a great deal longer than two years, because there is not a sufficient supply of builders' spoil lying about to provide anything like the material needed to fill the area of the tip. The local building operations have themselves consumed a lot of their own spoil in a cut and fill operation.
My hon. Friend referred to the meeting which took place. Of course, there is every reason to think that the local planning authority had received a detailed plan of operations from the district council and that, therefore, the objectors were faced with a well-thought-out scheme of action. That does not in any way mean, however, that they were faced with a ready-made decision. Their objections were listened to.
The long list of conditions imposed by the local planning authority showed that those objections were carefully listened to. Indeed, had there not been a detailed plan in the minds of the local planning authority, the objectors would,


quite rightly, have been able to say that it was a half-baked scheme and that nobody had even thought it out. It is, therefore, unfair to blame the local planning authority and the local authorities for having a well-thought-out scheme. It does not follow that the objections were not seriously considered.
As a result of all this, it seems to me to be essentially a local matter properly decided by the procedure laid down by Parliament in the full light of publicly-advertised warning and careful study of the objections properly made by local residents. It will solve for two years the local problem of finding a refuse tip for household refuse. Any inconvenience that might be thought to arise from it

during the two years has been adequately protected against by the conditions imposed, and at the end of the time a universally welcomed playing field will permanently grace the site.
I very much hope that my hon. Friend will agree that this is essentially a local matter, that in the light of what I have tried to explain it was a local matter properly studied and properly decided and that it is now up to the local authority properly to enforce the conditions and preserve the amenities of the neighbourhood.

Question put and agreed to.

Adjourned accordingly as twenty-seven minutes past Ten o'clock.